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Qualcomm Rejects Broadcom's Unsolicited $105-Billion Takeover Bid
The biggest tech takeover in history is not happening: Qualcomm Inc. announced on Monday that its board has unanimously rejected Broadcom’s unsolicited $105-billion bid, saying that the offer undervalues the company and would be a bad deal for shareholders.
“It is the Board’s unanimous belief that Broadcom’s proposal significantly undervalues Qualcomm relative to the Company’s leadership position in mobile technology and our future growth prospects,” Paul Jacobs, executive chairman and chairman of the board of Qualcomm, said in a statement.
The San Jose, California-based Broadcom offered $70 per share for Qualcomm, representing a 28% premium over the closing price for the chip maker. However, the Wall Street Journal had predicted that Broadcom’s offer would likely not be enough, noting last week that Qualcomm “is expected ultimately to rebuff it on the grounds that the price isn’t high enough, especially given the significant risk that regulators would block it, according to some analysts.”
Qualcomm essentially confirmed as much on Monday.
“The Board and Management are singularly focused on driving value for Qualcomm’s shareholders. After a comprehensive review, conducted in consultation with our financial and legal advisors, the Board has concluded that Broadcom’s proposal dramatically undervalues Qualcomm and comes with significant regulatory uncertainty. We are highly confident that the strategy Steve and his team are executing on provides far superior value to Qualcomm shareholders than the proposed offer,” said Tom Horton, Presiding Director for Qualcomm Incorporated.
However, Broadcom said on Monday that its plans to continue its pursuit of the San Diego-based chip maker, which means that it will either have to either boost its offer or enter into a proxy battle with Qualcomm.
“This transaction will create a strong, global company with an impressive portfolio of industry-leading technologies and products, and we have received positive feedback from key customers about this combination,” Hock Tan, president and CEO of Broadcom, said in a statement. “We continue to believe our proposal represents the most attractive, value-enhancing alternative available to Qualcommstockholders and we are encouraged by their reaction. Many have expressed to us their desire that Qualcomm meet with us to discuss our proposal. It remains our strong preference to engage cooperatively with Qualcomm’s Board of Directors and management team.”