Qualcomm to Discard Broadcom's Bid

Gwen Vasquez
November 14, 2017

Qualcomm is set to reject the multi-billion takeover bid from fellow chipmaker Broadcom, reports have claimed. Qualcomm officially rejected the initial bid today, which was for $105 billion (it was originally reported to be around $130 billion).

"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". Broadcom said it would seek to engage with Qualcomm's board and management, adding that it had received positive feedback from key customers and stockholders.

"We continue to believe our proposal represents the most attractive, value-enhancing alternative available to Qualcomm stockholders and we are encouraged by their reaction", Broadcom CEO Hock Tan said of the offer.

Qualcomm CEO Steve Mollenkopf added that the United States 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.

Qualcomm's board of directors could meet as early as Sunday to review the unsolicited acquisition offer and decide on its strategy, the sources said.

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Last Monday, Broadcomm, a leading chip supplier to the wired, wireless, enterprise storage, and industrial end markets announced an unsolicited offer to buy Qualcomm.

Both semiconductor companies did not immediately respond to requests for comment.

This is just not how these big acquisitions work, usually, these companies sit together, work for a while and try to negotiate important details and then go to the public. 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. Qualcomm, famous for inventing 2G and 3G wireless network technology, now sells the mobile chips for smartphones and the radios that enable cellular communications.

As of 1650 GMT, Qualcomm shares were up 1.78% to $65.72 each and Broadcom had posted a 0.24% uptick to $265.61 per share.

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