Qualcomm rejects $130bn Broadcom takeover bid

Nov 16, 2017, 02:07
Qualcomm rejects $130bn Broadcom takeover bid

"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", Qualcomm executive chairman Paul Jacobs said in a press release. Its own board similarly thinks that the offer undervalues the company and NXPs shares were trading above Qualcomms offer.

Qualcomm, the largest chip maker for mobile devices, has rejected the $130 billion acquisition proposal of Broadcom saying no one is better than it to lead the mobile devices ecosystem.

Qualcomm CEO Steve Mollenkopf added that the U.S. chip maker has a future in mobile, the Internet of Things (IoT), edge computing and networking within the semiconductor industry, and the firm has no doubt of future growth in these areas. "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.

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The deadline is December 8 for Broadcom to submit a slate of alternative candidates to Qualcomm's 11-member board of directors to push the deal through.

It's not clear how Broadcom will respond.

It's interesting to note that Qualcomm didn't just come out and say, "we're not for sale". So while turning down a huge offer like that seems insane, the company really is probably worth more than what Broadcom was offering.

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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.

"Qualcomm's "thanks, but no thanks" response to the unsolicited bid by Broadcom isn't surprising and we would be surprised if at this point, Broadcom didn't move forward with a proxy fight", Loop Capital analyst Betsy Van Hees told Reuters.

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