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Qualcomm will reportedly reject Broadcom's offer

Qualcomm will reportedly reject Broadcom's offer

Qualcomm, the largest chip maker for mobile devices, has rejected the $130 billion acquisition proposal of Broadcom saying no one is better than it to lead the mobile devices ecosystem.

On November 6, 2017, Broadcom Limited (AVGO) announced a proposal to acquire all of the outstanding shares of Qualcomm for per share consideration of $70.00 in cash and stock.

The news agency's sources also suggested Broadcom could seek to pursue a hostile takeover by submitting directors for election to Qualcomm's board to force it to engage, should the latter's shareholders back its director candidates.

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.

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




"We continue to believe our proposal represents the most attractive, value-enhancing alternative available to Qualcomm stockholders and we are encouraged by their reaction", the company said. Broadcom is reportedly prepared to up its offer somewhat from its current level, although it's unclear how much higher they might be willing to go. Qualcomm and Broadcom did not immediately respond to requests for comment.

It's interesting to note that Qualcomm didn't just come out and say, "we're not for sale".

It's not surprising that the company rejected the offer, the offer was completely unsolicited as Qualcomm has not been seeking a buyout. 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.

Last week we reported that Broadcom was looking to purchase Qualcomm for $105 billion United States dollars.

At the time of writing, Qualcomm shares are priced at $65.50 pre-market. "Integration with Broadcom means more delays and execution risks", he added.

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