Qualcomm board unanimously rejects Broadcom's $121B takeover bid

AppleInsider

Qualcomm on Thursday said its board of directors has unanimously rejected a revised $121 billion buyout offer from Broadcom, saying the proposal "materially undervalues" the chipmaker's assets.

Assisted by its team of financial and legal advisors, Qualcomm's board determined the takeover bid also fails to compensate for the downside risk of a failed transaction, the company said in a statement.

In a letter to Broadcom, Qualcomm said the $121 billion offer on the table fails to take into account Qualcomm's pending NXP acquisition, the "significant opportunity" presented by 5G-related technologies and the "expected resolution" of ongoing licensing disputes. While litigants were not mentioned by name, Qualcomm in the latter consideration is referring to an protracted legal battle with Apple over licensing fees.

Last year, Apple leveled a $1 billion suit against Qualcomm, alleging the chipmaker participates in anticompetitive practices and uses its "monopoly power" to charge excessive royalties. Apple subsequently halted payout of all licensing fees to the firm, a strategy adopted by partner suppliers last April.

Qualcomm fired back with a barrage of legal overtures initially claiming breach of contract. The firm later applied pressure with patent infringement filings in Germany, China and the U.S. before seeking a U.S. International Trade Commission ban on iPhone 8 and iPhone X in November.

Beyond its legal spat with Apple, Qualcomm is the target of multiple government probes and was recently hit with a $1.2 billion fine from EU regulators for making illegal payments to Apple in a bid to secure component orders.

Broadcom in an initial takeover bid offered to buy Qualcomm at $70 per share, but later raised the figure to $82 per share.

Though the revised bid was denied, Qualcomm in its letter said it is open to meeting with Broadcom to address what it characterizes as serious deficiencies in value and certainty.

Cesar Battistini Maziero

They should just let this company die.

ericthehalfbee

So the board is just as arrogant as Qualcomm execs still thinking they're going to come out ahead in all of this.

larryjw

Double the current stock price is way overvalued. A couple of years from now, half the current stock price will be an overvalue.

As a disappointed stockholder, and one who hasn’t seen anything positive with the company nor its stock for many years, at this point I’d be happy with anything over its current valuation. 

racerhomie3

I am no expert , but I think Qualcomm is going to die a slow & miserable death.

anantksundaram

ericthehalfbee said:

So the board is just as arrogant as Qualcomm execs still thinking they're going to come out ahead in all of this.

Yeah, I have a feeling they’re going to look back on this and kick themselves in their collective butts.

anantksundaram

larryjw said:

Double the current stock price is way overvalued. A couple of years from now, half the current stock price will be an overvalue.

As a disappointed stockholder, and one who hasn’t seen anything positive with the company nor its stock for many years, at this point I’d be happy with anything over its current valuation. 

Assuming there are more shareholders like you — and I would not be surprised in the least — maybe Broadcom should (and will) go over the heads of the management/Board, and do a tender offer. This could turn ‘hostile,’ in other words.

jd_in_sb

I remember when yahoo turn down $40 billion from Microsoft. Oops. 

hammeroftruth

So they are as arrogant as Blackerry. 
Let their legal battles eat them away. 
All that will be left will be a few patents that other tech companies can fight over like a carcass in the Serengeti. 

tshapi

They just want to get the highest value, they do have a point about the potential of the company they are acquiring as well as the technology for 5g the are doing r&d for 

ksec

I wonder how this things goes normally? If I am a shareholder, and I have an opportunity of selling those stocks at double the price, while seeing uncertainly in the future 2 - 3 years ever reaching those value, I would be very pissed.

Assuming I dont love Qualcomm and merely only an investor.

To be honest, the revised price was much higher then what i did expect. 

Question

In a letter to Broadcom, Qualcomm said the $121 billion offer on the table fails to take into account Qualcomm's pending NXP acquisition

I thought those $121 Billion was for Qualcomm alone and Broadcom will also paid the confirmed acquisition cost to NXP. What exactly has Broadcom not take into account?

carnegie

ksec said:

I wonder how this things goes normally? If I am a shareholder, and I have an opportunity of selling those stocks at double the price, while seeing uncertainly in the future 2 - 3 years ever reaching those value, I would be very pissed.

Assuming I dont love Qualcomm and merely only an investor.

To be honest, the revised price was much higher then what i did expect. 

Question

In a letter to Broadcom, Qualcomm said the $121 billion offer on the table fails to take into account Qualcomm's pending NXP acquisition

I thought those $121 Billion was for Qualcomm alone and Broadcom will also paid the confirmed acquisition cost to NXP. What exactly has Broadcom not take into account?

The Broadcom offer is conditioned on either the NXP deal going through on current terms or it being canceled. In other words, Broadcom is willing to acquire Qualcomm whether it completes its NXP acquisition or not.

But the price Broadcom would be paying would be the same either way. The Qualcomm acquisition of NXP is an all-cash deal. So Broadcom would effectively be paying for NXP even without paying more to acquire Qualcomm. Broadcom either gets Qualcomm as it is or it gets Qualcomm plus NXP, but with less cash and more debt. The price that would be paid for NXP would be realized as less Qualcomm cash and more Qualcomm debt which Broadcom would be acquiring.

ksec

carnegie said:

ksec said:

I wonder how this things goes normally? If I am a shareholder, and I have an opportunity of selling those stocks at double the price, while seeing uncertainly in the future 2 - 3 years ever reaching those value, I would be very pissed.

Assuming I dont love Qualcomm and merely only an investor.

To be honest, the revised price was much higher then what i did expect. 

Question

In a letter to Broadcom, Qualcomm said the $121 billion offer on the table fails to take into account Qualcomm's pending NXP acquisition

I thought those $121 Billion was for Qualcomm alone and Broadcom will also paid the confirmed acquisition cost to NXP. What exactly has Broadcom not take into account?

The Broadcom offer is conditioned on either the NXP deal going through on current terms or it being canceled. In other words, Broadcom is willing to acquire Qualcomm whether it completes its NXP acquisition or not.

But the price Broadcom would be paying would be the same either way. The Qualcomm acquisition of NXP is an all-cash deal. So Broadcom would effectively be paying for NXP even without paying more to acquire Qualcomm. Broadcom either gets Qualcomm as it is or it gets Qualcomm plus NXP, but with less cash and more debt. The price that would be paid for NXP would be realized as less Qualcomm cash and more Qualcomm debt which Broadcom would be acquiring.

So, I dont undertstand where Qualcomm is going. But judging from the stock market reaction after the news, it seems investor aren't too upset about it.