Qualcomm dismisses Broadcom's latest offer - claims it still undervalues the company

Cesar Mills
February 10, 2018

Qualcomm on Thursday said its board unanimously rejected Broadcom's revised acquisition offer which consisted of $60 per share in cash and $22 per share in Broadcom stock.

It can be said that Qualcomm is definitely not convinced that the value-add the company made after acquiring NXP Semiconductor is not being appreciated by Broadcom. "We want to reiterate that $82 per Qualcomm share is our best and final offer", said, Hock Tan, President and CEO. Before that, Broadcom was looking for replacing the entire 12 member Qualcomm board with Broadcom's people. Qualcomm shareholders are set to vote for directors at the company's annual stockholder meeting next month.

"Your proposal is inferior relative to our prospects as an independent company and is significantly below both trading and transaction multiples in our sector", said Paul Jacobs, executive chairman of Qualcomm.

Broadcom had originally bid US$104 billion (~RM413 billion) for Qualcomm back in November 2017.

With that in mind, the company is seeking to strike a balance between continued resistance to Broadcom's takeover and heeding the calls of shareholders who have urged the company to engage with its rival in case it can clinch an attractive deal.

As for the market experts, Tan's accomplishments this far are likable.

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Broadcom is incorporated and now based in Singapore, but Tan announced late a year ago while visiting President Donald Trump at the White House that the company would return its corporate headquarters to the USA, using San Jose as a base.

At any such meeting, Qualcomm have two questions for Broadcom. Regulators may decide that it would be nearly a monopoly on the smartphone chip market.

The fate of Qualcomm's licensing business is a key to its future.

Broadcom's takeover attempt is complicated further by Qualcomm's pending acquisition of NXP Semiconductors NV, meant to give Qualcomm broader access to new markets.

Qualcomm also had concerns regarding if the transaction would complete or not due to regulators.

Qualcomm, which has locked horns with Apple over patent licensing practices, sells both chips and charge a patent royalty for nearly all smartphones sold globally. That cash influx fuels industry-leading research and design, which in turn helps the chip unit build the most advanced products.

Other reports by GizPress

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