Qualcomm says no to huge offer.
Chipmaker rejects unsolicited $103 billion offer, saying that it was undervalued
SAN JOSE » Broadcom’s efforts to acquire Qualcomm hit a roadblock Monday as the San Diego-based communications chipmaker rejected Broadcom’s $103 billion takeover offer.
Qualcomm’s board of directors released a statement before the stock market opened Monday, with Qualcomm Executive Chairman Paul Jacobs saying Broadcom’s unsolicited bid is simply not enough for Qualcomm to accept.
“Broadcom’s proposal significantly undervalues Qualcomm relative to the company’s leadership position in mobile technology and our future growth prospects,” Jacobs said.
By turning down Broadcom’s offer, Qualcomm has set the stage for a number of possibilities that could affect its future. Broadcom could seek out alliances with Qualcomm’s large, institutional shareholders. The company could keep its price offer in place and go as far as to launch a proxy fight at Qualcomm’s next annual shareholders’ meeting. Broadcom could even raise its bid and put more pressure upon Qualcomm’s senior executives and board members to accept a deal.
“I’m not surprised at all at Qualcomm’s rejection,” said Patrick Moorhead, principal analyst with Moor Insights & Strategy. “The bid was a low-ball offer, (and) well below the company’s short-term value. Strategically, it doesn’t even make sense given Broadcom’s short-term approach.”
Broadcom made its offer for Qualcomm on Nov. 6. The deal offered Qualcomm shareholders $60 a share, plus $10 in Broadcom stock for each share of Qualcomm. With the assumption of Qualcomm’s debt, the deal would have been worth as much as $130 billion.
But Qualcomm Chief Executive Officer Steve Mollenkopf said that Qualcomm
is in a competitive position where it doesn’t need to jump at an offer, even one as large as Broadcom’s.
“No company is better positioned in mobile, IoT (internet of things), automotive, edge computing and networking within the semiconductor industry,” Mollenkopf said, in Qualcomm’s statement. “We are confident in our ability to create significant additional value for our stockholders as we continue our growth in these attractive segments
and lead the transition to 5G (mobile technology).”
Qualcomm said it would have no further comment on the matter.
In a statement sent to this publication, Broadcom said it remains “fully committed” to pursuing an acquisition of Qualcomm.
“We have received positive feedback from key customers about this combination,” said Broadcom CEO Hock Tan. “We continue to believe our proposal represents the most attractive, value-enhancing alternative available to Qualcomm stockholders, and we are encouraged by their reaction.”
Broadcom lists San Jose as its co-headquarters, and is in the process of moving its legal headquarters from Singapore to the United States.
Qualcomm shares rose almost 3 percent, to close at $66.49, while Broadcom closed 0.02 percent higher, at $265.01 a share in late trading Monday.
Qualcomm said the deal by Broadcom would face substantial regulatory resistance to a merger of the massive chipmakers.