Qualcomm rejects Broadcom's revised acquisition offer, proposes a meeting instead

Javier Stokes
February 10, 2018

According to the California-based chipset maker, Broadcom's proposal materially undervalues the company and falls well short of the firm regulatory commitment.

Although Qualcomm has rejected the "final offer", the company is still open to discuss "serious deficiencies in value and certainty" in the proposal.

If the new board members will be in favor of the Broadcom bid, then the acquisition will become a reality. Qualcomm has offered to talk to Broadcom to come up with a better deal.

The board has also called on Tan to clarify whether Broadcom is willing to commit to take whatever actions would be necessary to clear the regulatory hurdles and address the customer and licensee risk that Qualcomm would be exposed to during the transaction period.

Broadcom added that it met with Qualcomm's largest shareholders in the past week, and had "no doubt" that reaching a deal on a merger "is their strong desire as well".

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On Friday, Broadcom released a letter sent from Hock Tan, Broadcom president and CEO to Qualcomm's Executive Chairman of the Board of Directors, Dr. Paul Jacobs. It's not that shareholders don't like the deal - most do, and they think their company can do a much better job running Qualcomm.

The news of the rejected offer comes just as Qualcomm announces a comprehensive list of hardware manufacturers and network operators that are on-board with its 5G launch aims, with the likes of Asus, Nokia, HTC, LG, OnePlus, Sony, Xiaomi and ZTE all game. And last month Qualcomm argued it can generate long-term annual revenue growth of 6%-8%, and that the company's serviceable addressable market (SAM) will grow by a factor of 6x from 2015 to 2020, to a total of $150 billion.

The fate of Qualcomm's licensing business is a key to its future.

Regulators around the world are fining or investigating Qualcomm, supporting elements of Apple Inc's claims in a lawsuit alleging Qualcomm abuses its dominant position in mobile chips. Qualcomm investors will decide if they want to replace the current board with directors nominated by Broadcom who would accept the $121 billion offer.

This proposal to acquire Qualcomm is extremely compelling compared to any other alternative available to Qualcomm, with or without the acquisition of NXP, and we believe any responsible board would engage with us, without further delay, to turn this proposal into an executed definitive agreement.

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