UPDATE 2 — Mobile chipmaker Qualcomm on Monday rejected rival Broadcom’s $130 billion takeover bid, saying the offer undervalues Qualcomm.
“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,” said Paul Jacobs, executive chairman of Qualcomm.
Qualcomm is currently involved in a massive legal battle with Apple.
Apple is challenging Qualcomm’s business practice of charging a percentage of the total price of iPhones and other Apple devices as a licensing fee for its patents.
Steve Mollenkopf, CEO of Qualcomm, said: “No company is better positioned in mobile, IoT, automotive, edge computing and networking within the semiconductor industry.
“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.”
Tom Horton, presiding director for Qualcomm, said: “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.”
Broadcom announced it “remains fully committed” to pursuing its acquisition of Qualcomm.
“Broadcom’s offer of $70.00 per share, which consists of $60.00 in cash and $10.00 per share in Broadcom shares, represents a 28% premium over the closing price of Qualcomm’s common stock on November 2, 2017, the last unaffected trading day prior to media speculation regarding a potential transaction, and a premium of 33% to Qualcomm’s unaffected 30-day volume-weighted average price,” said Broadcom.
“The Broadcom proposal stands whether Qualcomm’s pending acquisition of NXP Semiconductors N.V. is consummated on the currently disclosed terms of $110 per NXP share or is terminated.”
Broadcom CEO Hock Tan said: “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.
“We continue to believe our proposal represents the most attractive, value-enhancing alternative available to Qualcomm stockholders 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.”