Qualcomm rejects Broadcom's $70 per share takeover offer
(QCOM) announced that its board rejected Broadcom's buyout Proposal saying that proposal significantly undervalues Qualcomm relative to the Company's leadership position in mobile technology and future growth prospects.
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.
Fellow chipmaker Broadcom had offered $60 in cash and $10 in stock for each Qualcomm share, a transaction valued at $105 billion.
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. "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".
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.
"We are well-advised and know what our options are, and we have not eliminated any of those options", Broadcom Chief Executive Hock Tan told Reuterslast week.
It's interesting to note that Qualcomm didn't just come out and say, "we're not for sale".
"For a company like Broadcom, Qualcomm's modem leadership completes the wireless picture", he noted in a statement. Yes, of course. But, it will take a huge R&D budget and multiple years to get customer acceptance and Broadcom's lack of experience in 4G basebands further complicates the process as backward compatibility is a key requirement for network operators.
NXP shares have been trading above Qualcomm's offer price, as many NXP shareholders, including hedge fund Elliott Management Corp, have been holding out for a better price.
The combined revenue of the three firms in question - Qualcomm, Broadcom and NXP - is expected to touch $51 billion in FY 2017 with EBIDTA of aroud $23 billion, forecasts the semiconductor fiem, justifying its proposal.
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