Qualcomm has announced today that the Board of Directors has rejected Broadcom’s proposal to acquire the company for around $105 billion. The BOD believes that Broadcom’s offering undervalues Qualcomm and its growth perspectives in the upcoming 5G era.

Last week Broadcom offered to buy all of the outstanding shares of Qualcomm for $105 billion in total for cash and stock. Under the terms of the deal, shareholders of Qualcomm would get $60 in cash and $10 in Broadcom’s stock for each share, which would be a 28% premium over the price of a Qualcomm share on November 2, 2017.

Broadcom wanted to buy Qualcomm primarily because of its LTE and 5G technologies to complement its other telecommunication assets. Qualcomm itself is in process of taking over NXP Semiconductor. The latter is a leading supplier of electronics for automobiles and when Qualcomm gets NXP, it will be particularly well positioned to become a leading maker of chips for self-driving and electric vehicles.

“No company is better positioned in mobile, IoT, automotive, edge computing and networking within the semiconductor industry,” said Steve Mollenkopf, CEO of Qualcomm. “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.”

Shares of Qualcomm have been declining in value in the recent quarters, which is why Broadcom made its proposal. 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).

Qualcomm’s board believes that Broadcom’s proposal not only undervalues the company but also “comes with significant regulatory uncertainty”. The latter claim may indicate that Qualcomm’s Board Of Directors may not be interested in the potentially record-setting transaction even if Broadcom increases its bid.

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Source: Qualcomm

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  • dgingeri - Monday, November 13, 2017 - link

    About 10 years ago, the stock for Avago started seeing a major flux as old owners sold off the company and new investors came in. In late 2008, as a bunch of companies started becoming vulnerable due to the stock market disruption, and after a major change in the membership of their board, Avago started buying up several server component manufacturers. They bought up LSI, the ethernet division of Qlogic, PLX, and Broadcom, but also several small component manufacturers. They changed the name over to Broadcom Limited to disguise the changes, but in each case, they drove up the prices of the components significantly.

    I have since found out that the people behind this activity are ultrarich investors with strong connections to the Democratic party, and also have major stakes in Citibank, Comcast, and Sony/Columbia Pictures. These are people who wield immense wealth.

    Since the offer was declined, Qualcomm stock has seem a lot more buying activity than usual. Usually, when a buyout is declined like this, short term investors who thought they'd turn a big profit sell their shares back out to invest elsewhere, and the stick price drops back down to previous levels, but in this case, more people are buying into Qualcomm than selling out. This very well could be the cabal of investors behind Broadcom Limited buying into Qualcomm to alter the management to their favor. Don't underestimate them.
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  • dgingeri - Monday, November 13, 2017 - link

    Be prepared for a hostile takeover. This is Avago/Broadcom we're talking about. They've been gobbling up tech companies for the last decade. Reply
  • Samus - Tuesday, November 14, 2017 - link

    The SEC, FCC, and even the DoD may have a say in whether or not a foreign company will succeed with a "hostile takeover" of one of America's most valuable communication companies. Reply
  • londedoganet - Tuesday, November 14, 2017 - link

    But Broadcom isn't "foreign"; they're moving their place of incorporation to Delaware... (/s, maybe) Reply

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