Qual­comm turns down $103bn of­fer

Bangkok Post - - BUSINESS -

Mo­bile chip­maker Qual­comm Inc on Mon­day re­jected ri­val Broad­com Ltd’s $103-bil­lion takeover bid, say­ing the of­fer un­der­val­ued the com­pany and would face reg­u­la­tory hur­dles.

Broad­com said it would seek to en­gage with Qual­comm’s board and man­age­ment, adding that it had re­ceived pos­i­tive feed­back from key cus­tomers and stock­hold­ers.

“We con­tinue to be­lieve our pro­posal rep­re­sents the most at­trac­tive, value-en­hanc­ing al­ter­na­tive avail­able to Qual­comm stock­hold­ers and we are en­cour­aged by their re­ac­tion,” the com­pany said.

Both com­pa­nies count Ap­ple Inc among their top cus­tomers. An­a­lysts have said a deal be­tween the two would help Qual­comm set­tle its le­gal bat­tle with the iPhone maker as Broad­com has a closer re­la­tion­ship with Ap­ple.

Broad­com made an un­so­licited bid last week to buy Qual­comm in an ef­fort to be­come the dom­i­nant sup­plier of chips used in the 1.5 bil­lion or so smart­phones ex­pected to be sold around the world this year.

An­a­lysts say Broad­com can now raise its bid, go for a proxy fight or launch a hos­tile ex­change of­fer.

“Qual­comm’s ‘thanks, but no thanks’ re­sponse to the un­so­licited bid by Broad­com isn’t sur­pris­ing and we would be sur­prised if at this point, Broad­com didn’t move for­ward with a proxy fight,” Loop Cap­i­tal an­a­lyst Betsy Van Hees told Reuters.

If Broad­com makes a hos­tile bid, Qual­comm’s gov­er­nance rules would al­low the ri­val to sub­mit its own slate for the en­tire 11-mem­ber board by the Dec. 8 nom­i­na­tion dead­line.

The eas­i­est op­tion, how­ever, would be to talk to Qual­comm’s board and agree on a higher price.

“We are well-ad­vised and know what our op­tions are, and we have not elim­i­nated any of those op­tions,” Broad­com chief ex­ec­u­tive Hock Tan told Reuters last week.

The right price for Qual­comm could be be­tween $80 and $85 per share, and Broad­com could go up to $90, Susque­hanna an­a­lyst Christopher Rol­land told Reuters.

Any deal would face scru­tiny from the an­titrust reg­u­la­tors as the com­bined com­pany would own the high-end Wi-Fi busi­ness glob­ally, an­a­lysts said.

Reg­u­la­tors are al­ready scru­ti­n­is­ing Qual­comm’s $38-bil­lion ac­qui­si­tion of au­to­mo­tive chip­maker NXP Semi­con­duc­tors NV.

Broad­com has in­di­cated it is will­ing to buy Qual­comm ir­re­spec­tive of whether it closes the NXP deal.

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