Qualcomm decides to reject Broadcom's buyout proposal, but Broadcom still committed

16 November, 2017, 02:06 | Author: Brian Mcdaniel
  • Qualcomm rejects Broadcom's $70 per share takeover offer

The technology sector's largest takeover ever has been denied after chipmaker Qualcomm rejected a $130bn (€111.43bn) buyout offer from Broadcom.

That's a huge chunk of change, but apparently it wasn't enough to even tempt Qualcomm; their board has unanimously made a decision to reject Broadcom's offer.

Fellow chipmaker Broadcom had offered $60 in cash and $10 in stock for each Qualcomm share, a transaction valued at $105 billion. The board of directors believes the proposal is not in the best interest of Qualcomm and also undervalues the company.

A building on the Qualcomm campus is seen, as chip maker Broadcom Ltd announced an unsolicited bid to buy peer Qualcomm Inc for $103 billion, in San Diego, California, U.S. November 6, 2017.

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.

Broadcom CEO Hock Tan, who said earlier this month he would redomicile his company to the United States from Singapore, has stated he is open to launching a takeover battle. Qualcomm and Broadcom did not immediately respond to requests for comment.

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"Many have expressed to us their desire that Qualcomm meet with us to discuss our proposal". Qualcomm itself is in process of taking over NXP Semiconductor.

"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.

Broadcom shares are now up 0.3% on the day; Qualcomm is up 1.8%, at session highs.

NXP shares have been trading above Qualcomm's offer price, as many NXP shareholders, including hedge fund Elliott Management Corp, have been holding out for a better price.

Qualcomm no longer has a poison pill - a tactic to make shares of the company's stock look unattractive or less desirable to the acquiring firm - in its bylaws to deter potential suitors.

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