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Qualcomm decides to reject Broadcom's buyout proposal, but Broadcom still committed

Qualcomm decides to reject Broadcom's buyout proposal, but Broadcom still committed”

The proposal "significantly undervalues Qualcomm relative to the company's leadership position in mobile technology and our future growth prospects", Paul Jacobs, Qualcomm's executive chairman, said in a statement Monday.

A sign on the Qualcomm campus is seen in San Diego, California, U.S. November 6, 2017.

Broadcom, the US-based semiconductor firm, last week, had shown interest to buy the Snapdragon maker at a value of $70 per share in the acquisition proposal that would consist of $60 in cash and $10 per share in Broadcom shares. So while turning down a huge offer like that seems insane, the company really is probably worth more than what Broadcom was offering.

"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", he said, referring to the fifth-generation wireless networks in the works.

Both companies count Apple among their top customers. Thus, the board unanimously voted to reject Broadcom's proposal. The sources said Broadcom was preparing to submit a slate of directors by Qualcomm's December 8 nomination deadline.

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The news agency's sources also suggested Broadcom could seek to pursue a hostile takeover by submitting directors for election to Qualcomm's board to force it to engage, should the latter's shareholders back its director candidates. Meanwhile, Qualcomm is a larger company than Broadcom is - it earns $23 billion a fiscal year (vs. $16.93 billion earned by Broadcom) and it has 33,800 employees (vs. 15,700 employed by Broadcom).

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

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 merger deal would need to pass muster with Qualcomm shareholders and could face regulatory scrutiny in the United States and other markets. Qualcomm itself is in process of taking over NXP Semiconductor.



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