Qualcomm rejects Broadcom’s higher $121 billion hostile bid

https://www.bloomberg.com/news/articles/2018-02-08/qualcomm-rejects-broadcom-s-higher-121-billion-hostile-bid

Qualcomm Inc.’s board unanimously rejected a higher acquisition offer from Broadcom Ltd., spurning the largest technology takeover bid in history and likely leaving the future of the hostile $121 billion proposal to be decided by shareholders next month.

The offer “materially undervalues” Qualcomm and “falls well short of the firm regulatory commitment” needed to gain approval for such a transaction, the San Diego-based company said Thursday in a statement. Earlier this week, Broadcom raised its proposed price to $82 a share, a bid it called “best and final.” The deal would take the form of $60 in cash and the remainder in Broadcom shares, a bump of 17 percent from its opening offer in November of $70 a share, which Qualcomm also rejected.

Qualcomm offered to meet with Broadcom and provided a list of issues to address in order to further the conversation. Still, Qualcomm’s second dismissal of Broadcom’s approach may put the decision in the hands of shareholders, who will vote March 6 on whether to replace the smartphone-chip maker’s board with Broadcom’s own nominees. The vote will represent a choice between Broadcom’s strategy, under Chief Executive Officer Hock Tan, of acquiring companies and focusing on boosting profits, or Qualcomm management’s promise of future growth fueled by investment in new products and technology.

“Your proposal is inferior relative to our prospects as an independent company and is significantly below both trading and transaction multiples in our sector,” Chairman Paul Jacobs wrote in an open letter to Broadcom’s Tan.

Broadcom’s bid for the larger company is Tan’s most audacious move following a string of deals that have already made his company one of the world’s largest suppliers of semiconductors. He wants Qualcomm for its leading smartphone modem-chip division, an example of what he calls a “franchise” that will continue to dominate its industry. The market likes what Tan has accomplished so far. Stock of his company — formerly called Avago Technologies — ended 2009 at $18.29. It’s currently trading at more than $229.

https://en.wikipedia.org/wiki/Qualcomm

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this is a big one..

“the largest technology takeover bid in history and likely leaving the future of the hostile $121 billion proposal to be decided by shareholders next month.”

watch for maneuvering..

“Still, Qualcomm’s second dismissal of Broadcom’s approach may put the decision in the hands of shareholders, who will vote March 6 on whether to replace the smartphone-chip maker’s board with Broadcom’s own nominees.”

401

~ by seeker401 on February 15, 2018.

2 Responses to “Qualcomm rejects Broadcom’s higher $121 billion hostile bid”

  1. Qualcomm deals blow to Broadcom’s bid with sweetened NXP deal

    https://www.reuters.com/article/us-nxp-semicondtrs-m-a-qualcomm/qualcomm-deals-blow-to-broadcoms-bid-with-sweetened-nxp-deal-idUSKCN1G41AE

    • from article, “The takeover battle between Qualcomm and Broadcom is at the heart of a race to consolidate the wireless technology equipment sector, as smartphone makers such as Apple Inc (AAPL.O) and Samsung Electronics Co Ltd (005930.KS) use their market dominance to negotiate lower chip prices.

      “Singapore-based Broadcom is mainly a manufacturer whose connectivity chips are used in products ranging from mobile phones to servers. San Diego-based Qualcomm primarily outsources the manufacturing of its chips which are used for the delivery of broadband and data, a business that would significantly benefit from the rollout of 5G wireless technology.”

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