Qualcomm Board Rejects $121B Buyout Offer From Broadcom

Feb 09, 2018, 02:31

USA semiconductor company Qualcomm Inc on Thursday rejected Broadcom Ltd's revised $121 billion (86.81 billion pounds) buyout offer, but proposed meeting its peer to see whether they can address what it called the bid's "serious deficiencies in value and certainty".

The California-based group said in a letter to Broadcom that the latest offer unveiled earlier this week "materially undervalues Qualcomm" and does not take into account the possibility of a failure to win regulatory approval.

He also laid out questions for Broadcom should the two companies meet, including whether $82 per share really is Broadcom's highest offer, and just how far Broadcom was willing to go to close the deal.

Here's Qualcomm's letter to Broadcom: -- February 8, 2018 Mr. Hock Tan President and Chief Executive Officer Broadcom Limited 1 Yishun Avenue 7 Singapore 768923 Dear Mr.

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In other words, Qualcomm thinks that it can eventually be worth more on the stock market than $121 billion.

"However, the board is committed to exploring all options for maximizing shareholder value, and so we would be prepared to meet with you to allow you to explain how you would attempt to bridge these gaps".

Broadcom, which makes chips for everything from cable modems to set-top boxes and digital video recorders, first launched an unsolicited bid for Qualcomm, the world's largest maker of chips and processors for phones, in November for $70 a share, or $105 billion.

Qualcomm says that it is still undervalued at $121 billion. Your proposal is inferior relative to our prospects as an independent company and is significantly below both trading and transaction multiples in our sector.

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It also hinges on Qualcomm not delaying or adjourning its annual meeting past March 6, when Qualcomm shareholders will vote on a new slate of directors recommended by Broadcom and private-equity firm Silver Lake Partners or retain the existing directors. This is extremely important to value preservation for our shareholders.

"The differences in our business models expose the company to significant customer and regulatory risk between signing and closing an agreement", the letter said.

Qualcomm's proposed acquisition of NXP was approved by European Union antitrust regulators last month. In addition, it wants to know what steps he would take to ensure the deal closes.

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