Qualcomm rejects Broadcom's $103 billion offer

Reuters

"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.

Broadcom's efforts to acquire Qualcomm hit a roadblock Monday as the San Diego-based communications chipmaker rejected Broadcom's $103 billion takeover offer.

Broadcom and Qualcomm battled through press releases on Monday while investors tried to figure whether the two semiconductor giants would actually merge. The deal offered Qualcomm shareholders $60 a share, plus $10 in Broadcom stock for each share of Qualcomm. It signals directors believe Qualcomm can boost its stock price higher than the offer of $70 a share, a 28% premium to its price November 2, before The Wall Street Journal reported the bid was imminent. It said its dominance of the mobile processors market and future growth prospects mean it is unable to accept Broadcom's valuation. The combined company would be third-largest chipmaker behind Intel and Samsung. "It adds flexibility to the Qualcomm side because they realize there's enhanced value in getting this settled quickly: a better chance of staying independent", he said. Qualcomm has agreed to buy NXP, and Broadcom is buying Brocade.

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As we said when the proposal was announced, it's likely that Broadcom also smelled blood in the water, because Qualcomm is now fighting a battle on multiple fronts, what with the ongoing dispute with Apple, the Federal Trade Commission (FTC) investigation, and other conflicts.

QCOM shares traded as high as $80 just a few years ago, so it makes sense that the company wouldn't be ecstatic with a $70 takeover offer.

In its latest earnings call with analysts, Qualcomm CEO Steve Mollenkopf said the company aimed to close the NXP deal by the end of the year but it could slip until next year. Broadcom's surprise bid for Qualcomm was announced a week ago and would have resulted in the biggest merger to date in the tech industry. "We are confident in our ability to create significant additional value for our stockholders as we continue our growth in these attractive segments and lead the transition to 5G (mobile technology)".

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