Qualcomm rejects Broadcom's $103-billion takeover bid

Qualcomm rejects Broadcom's $103-billion takeover bid

The BOD believes that Broadcom's offering undervalues Qualcomm and its growth perspectives in the upcoming 5G era.

Qualcomm said that, after a comprehensive review of the offer, its board unanimously concluded that the $70-a-share proposition "significantly undervalues" the chipmaker giant.

Qualcomm has announced today that the Board of Directors has rejected Broadcom's proposal to acquire the company for around $105 billion.

Broadcom offered $60 for every outstanding share of Qualcomm, plus an additional $10 in Broadcom stock.

If Broadcom makes a hostile bid, Qualcomm's governance rules would allow the rival to submit its own slate for the entire 11-member board by the December 8 nomination deadline. Qualcomm and Broadcom did not immediately respond to requests for comment.

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Broadcom has also been deliberating the possibility of raising its bid for Qualcomm, including through more debt financing, some of the sources said, although it was not clear when Broadcom would choose to make such a move.

The company's interest in Qualcomm centers on the latter's leadership in modems, says analyst Strategy Analytics analyst Stephen Entwistle.

It's not surprising that the company rejected the offer, the offer was completely unsolicited as Qualcomm has not been seeking a buyout. "So, the only option is to look for an acquisition to fill this gap and Qualcomm fits the bill perfectly".

The combined revenue of the three firms in question - Qualcomm, Broadcom and NXP - is expected to touch $51 billion in FY 2017 with EBIDTA of aroud $23 billion, forecasts the semiconductor fiem, justifying its proposal.

In Entwistle's view were Qualcomm to accept the acquisition offer it would increase its dependence on the smartphone market - at a time when it has been working to expand beyond smartphones, such as via a long-in-the-works acquisition of chipmaker NXP, which has a focus on car-related applications, security-based identification and IoT. "Integration with Broadcom means more delays and execution risks", he added.

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