Qual­comm re­jects Broad­com’s $103 bil­lion of­fer

The Palm Beach Post - - MONEY & MARKETS -

NEW YORK — Qual­comm re­jected an un­so­licited, $103 bil­lion of­fer from Broad­com, say­ing that the pro­posal is sig­nif­i­cantly un­der­val­ued and that a tie-up be­tween the mas­sive chip­mak­ers would face sub­stan­tial reg­u­la­tory re­sis­tance.

Qual­comm said Mon­day that it’s in a unique po­si­tion to grow on its own.

“We are highly con­fi­dent that the strat­egy (CEO Steve Mol­lenkopf ) and his team are ex­e­cut­ing on pro­vides far su­pe­rior value to Qual­comm share­hold­ers than the pro­posed of­fer,” said Tom Hor­ton, Qual­comm di­rec­tor.

Broad­com’s bid last week rep­re­sented a 28 per­cent premium over the clos­ing price of Qual­comm shares on Novem­ber 2, but an­a­lysts were ex­pect­ing Qual­comm to re­ject the $70-per-share bid.

Broad­com said Mon­day that it re­mains com­mit­ted to pur­su­ing a deal.

“We have re­ceived pos­i­tive feed­back from key cus­tomers about this com­bi­na­tion,” CEO Hock Tan said in a com­pany re­lease. “We con­tinue to be­lieve our pro­posal rep­re­sents the most at­trac­tive, value-en­hanc­ing al­ter­na­tive avail­able to Qual­comm stock­hold­ers.”

Qual­comm, which makes the Snap­dragon chips found in smart­phones and tablets, is the world’s No. 3 chip sup­plier, ac­cord­ing to re­search firm Gart­ner. A com­bi­na­tion with Broad­com would not have pro­pelled it past in­dus­try lead­ers In­tel and Sam­sung.

Broad­com Ltd., also an­nounced, in the com­pany of Pres­i­dent Don­ald Trump, that it would bring its cor­po­rate ad­dress back from Sin­ga­pore, to Delaware.

The com­pany hopes the change will make it easier to get deals done and more specif­i­cally, help it avoid a cum­ber­some fed­eral re­view process for a $5.5 bil­lion deal for U.S. net­work provider Bro­cade Com­mu­ni­ca­tions Sys­tems. The deal has been de­layed by the Com­mit­tee on For­eign In­vest­ment in the United States, which in­ves­ti­gates pro­posed ac­qui­si­tions of U.S. com­pa­nies by for­eign buy­ers on na­tional se­cu­rity and in­tel­lec­tual prop­erty grounds.

Qual­comm has a pend­ing $28.1 bil­lion deal with NXP Semi­con­duc­tor that’s un­der reg­u­la­tory re­view in Europe.

Qual­comm, based in San Diego, rode the boom in mo­bile. Today’s Broad­com is the prod­uct of a $37 bil­lion com­bi­na­tion in 2016 be­tween Avago, a Sin­ga­pore-based com­pany that was once part of a for­mer unit of pi­o­neer­ing PC maker Hewlett-Packard, and Broad­com, an­other com­pany with ori­gins in South­ern Cal­i­for­nia which made chips for tablets, smart­phones and other tele­com and ca­ble ap­pli­ca­tions.

Shares in Qual­comm added $1.92 to $66.49. Broad­com rose 5 cents to $265.01.

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