Qualcomm denies $130bn rival takeover

Qualcomm rejects Broadcom's $70 per share takeover offer

"It is the board's unanimous belief that Broadcom's proposal significantly undervalues Qualcomm relative to the company's leadership position in mobile technology and our future growth prospects", said Paul Jacobs, executive chairman and chairman of the board, in a statement.

Qualcomm Chief Executive Steven Mollenkopf has spent the past few days soliciting feedback from Qualcomm shareholders, and feels that Broadcom's $70-per-share bid undervalues the company and does not price in the uncertainty associated with getting the deal approved by regulators, according to the sources.

Qualcomm's board of directors has unanimously voted to reject an acquisition offer from rival chipmaker Broadcom. "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. Qualcomm and Broadcom did not immediately respond to requests for comment. Yesterday Reuters suggests it might be considering raising its offer if it were rejected, citing unnamed sources.

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The deadline is December 8 for Broadcom to submit a slate of alternative candidates to Qualcomm's 11-member board of directors to push the deal through.

It's interesting to note that Qualcomm didn't just come out and say, "we're not for sale". That could indicate Qualcomm is open to more generous buyout offers, but it's unclear how much more Broadcom would be willing to spend. "Can Broadcom develop a 5G baseband on its own? So, the only option is to look for an acquisition to fill this gap and Qualcomm fits the bill perfectly". Meanwhile, Qualcomm is a larger company than Broadcom is - it earns $23 billion a fiscal year (vs. $16.93 billion earned by Broadcom) and it has 33,800 employees (vs. 15,700 employed by Broadcom).

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.

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