Sorry, Broadcom: Qualcomm Isn't Giving In On Your $121 Billion Acquisition Offer

by Ben Pena February 10, 2018, 2:52
Sorry, Broadcom: Qualcomm Isn't Giving In On Your $121 Billion Acquisition Offer

Qualcomm has released a letter it penned to Broadcom in reply to the latest bid, but it left the door open for a further bid by directly asking for its rival's potential highest bid.

But the question of when still remains.

Qualcomm's board of directors unanimously rejected a sweetened acquisition proposal worth $121 billion from Broadcom, saying it undervalues Qualcomm and would not adequately compensate Qualcomm in the event that the deal was struck down by regulators.

Before reports of Broadcom's $70-a-share offer in November, Qualcomm's stock had been trading at less than $55, partly because of worries its earnings would continue to be hurt by customers such as Apple refusing to pay.

However, Qualcomm's second rejection of Broadcom's approach might put the verdict in shareholders hands, who are likely to vote on March 6th on whether to change the smartphone-chip maker's board with Broadcom's personalcandidates.

Qualcomm isn't ready to throw in the towel, however, as the company has offered to meet with Broadcom so they can explain how they would bridge the gaps in both value and deal certainty.

In a letter to Broadcom CEO, Hock Tan, Qualcomm's chairman, Paul Jacobs expressed his regulatory concerns: "It is indisputable that there are significant regulatory hurdles in your proposed transaction".

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Broadcom on February 5 also offered two board positions to Qualcomm persons in the Broadcom board after closing the deal.

Broadcom's last offer to Qualcomm was labelled a "Best and Final Offer".

Broadcom said it proposed to meet by this weekend, but Qualcomm was not willing to meet until Tuesday, after the two companies' respective meetings with proxy advisors Glass Lewis and ISS.

The revised price also includes taking over $25 billion in net debt from Qualcomm.

It believes Broadcom needs to offer a "hell-or-high-water" legal commitment to complete the deal irrespective of divestitures that antitrust watchdogs around the world may require. That cash influx fuels industry-leading research and design, which in turn helps the chip unit build the most advanced products.

Qualcomm says only 1.5% of NXP common share "have been validly tendered pursuant to the tender offer and not properly withdrawn".

However, the door was not completely closed and Broadcom's "best and final" deal may not be so final after all.


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