Qualcomm rejects Broadcom acquisition offer

Laura Christensen
November 16, 2017

US chipmaker Qualcomm Inc (QCOM.O) is making preparations to reject rival Broadcom Ltd's (AVGO.O) $103 billion bid as early as this week, four people familiar with the matter said on Sunday, setting the stage for one of the biggest-ever takeover battles.

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.

Last week Broadcom offered to buy all of the outstanding shares of Qualcomm for $105 billion in total for cash and stock. "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".

Broadcom's proposal followed Tan's visit to the White House this month, where he met President Donald Trump and announced plans to move the tech company back to the United States from Singapore. Analysts have said a deal between the two would help Qualcomm settle its legal battle with the iPhone maker as Broadcom has a closer relationship with Apple.

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That would allow Qualcomm shareholders to vote to replace the company's board and force it to engage with Broadcom.

At the time of writing Broadcom could not be reached for comment. It is engaged in a patent infringement dispute with Apple Inc (AAPL.O), and is also trying to close its $38 billion acquisition of automotive chipmaker NXP Semiconductors NV (NXPI.O) after signing a deal in October 2016. 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).

Despite being a very, very large offer, Qualcomm believes they're in an excellent position in the growing internet-connected market.

Broadcom doesnt care about the outcome of that deal – it has stated that it wants to acquire Qualcomm with or without NXP.

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