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