Last Monday, Broadcomm, a leading chip supplier to the wired, wireless, enterprise storage, and industrial end markets announced an unsolicited offer to buy Qualcomm. The proposed transaction was valued at approximately $130 billion. Under Broadcom’s proposal, Qualcomm stockholders would receive per share and it will consist of $60.00 in cash and $10.00 per share in Broadcom shares.
Today, Qualcomm’s Board of Directors unanimously rejected the proposal announced by Broadcom. Qualcomm’s board believes that Broadcom’s proposal significantly undervalues Qualcomm given its leadership position in mobile technology and their future growth opportunity.
“No company is better positioned in mobile, IoT, automotive, edge computing and networking within the semiconductor 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,” said Steve Mollenkopf, Chief Executive Officer of Qualcomm Incorporated.
“The Board and Management are singularly focused on driving value for Qualcomm’s shareholders. After a comprehensive review, conducted in consultation with our financial and legal advisors, the Board has concluded that Broadcom’s proposal dramatically undervalues Qualcomm and comes with significant regulatory uncertainty. 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 Incorporated.
After this response from Qualcomm, we are yet to hear Broadcom’s reaction. We are not sure whether Broadcom can initiate a proxy fight to get the deal approval from Qualcomm’s board. If the deal goes through as proposed, it would be the largest technology acquisition ever. Qualcomm’s share were up 1.27 percent at $65.38 since the market opened today, while those of Broadcom fell 0.35 percent to $264.05.