Qualcomm, Inc. (NASDAQ: QCOM) announced that its Board of Directors unanimously rejected the unsolicited proposal announced by Broadcom Ltd (NASDAQ: AVGO), stating, "It is the Board's unanimous belief that Broadcom's proposal significantly undervalues Qualcomm".
Broadcom chief executive Hock Tan on Monday last week offered US$70 a share in cash and stock for Qualcomm, seeking to build a powerhouse that leads the market for wireless chips in devices such as Apple Inc's iPhones.
GGP closed at $23.20, up $3.19. If it does sell to Broadcom, it means the combined businesses' chips will be present in more than a billion smartphones sold every year. "We would not make this offer if we were not confident that our common global customers would embrace the proposed combination". In fact, if the deal goes ahead it would probably the biggest in the technology industry's history, worth more than Dell's purchase of EMC in 2015, which was valued at $67 billion.
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"Qualcomm shareholders are likely to hold out for more, but we believe something in the US$80-ish range is likely enough to bring a lot of them around", Sanford C. Bernstein analyst Stacy Rasgon wrote in a note published at the weekend. Sources close to the deal say that Broadcom is preparing to challenge Qualcomm's sitting board members with its own hand-picked slate at the next stockholder's vote.
Tan, who has built Broadcom through a series of transactions that have helped reshape the US$300 billion semiconductor industry, has previously been able to pull off deals with friendly approaches.
Steve Mollenkopf, Qualcomm's chief executive, said the California company remains confident about its future. That being said, all of this could be decided as early as next week, with Qualcomm's board of directors reportedly planning on meeting on Sunday to review the offer and come up with a strategy. Qualcomm and Broadcom did not immediately respond to requests for comment. The company, based in San Diego, is also brawling with Apple, a major client, over royalties that it collects on mobile gadgets.
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On inspection, the officers found he shared the same with his friend who had already boarded the Kochi-Mumbai Jet Airways flight. In a conversation while boarding the aircraft, the man allegedly said that "he will hijack the plane with a happy bomb".
Broadcom has also been deliberating the possibility of raising its bid for Qualcomm, including through more debt financing, some of the sources said, although it was not clear when Broadcom would choose to make such a move.
"No customer wants to see a supplier have that much power", said Romit Shah, a senior equity analyst at Nomura Instinet. "Broadcom has to convince those companies that they stand to benefit".
Information for this article was contributed by Tiffany Hsu of The New York Times.
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