Sat, Feb 10, 2018 - Page 10 News List

Qualcomm rejects Broadcom bid

HOSTILE PROPOSAL:A letter from the Qualcomm chairman to the Broadcom chief executive offered a meeting to discuss ‘significant issues that remain unaddressed’


Qualcomm Inc on Thursday rejected a record US$121 billion hostile bid from computer chip rival Broadcom Ltd, but offered to meet with the Singapore-based firm to discuss the increased offer.

The California-based group said in a letter to Broadcom that the latest offer unveiled earlier this week “materially undervalues Qualcomm” and does not take into account the possibility of a failure to win regulatory approval.

However, the letter from Qualcomm chairman Paul Jacobs to Broadcom chief executive Hock Tan (陳福陽) opened the door to talks to discuss “the significant issues that remain unaddressed” in the hostile proposal.

The Qualcomm board “has unanimously determined that your amended offer materially undervalues Qualcomm, and falls well short of the firm regulatory commitment the board would demand given the significant downside risk of a failed transaction,” Jacobs said in his letter. “However, the board is committed to exploring all options for maximizing shareholder value and so we would be prepared to meet with you to allow you to explain how you would attempt to bridge these gaps.”

The move comes three days after Broadcom boosted its offer to US$82 a share to create a global giant in the chipmaking sector, a deal worth US$146 billion including assumed debt.

Jacobs said the offer “raises more questions than it answers” and also fails to address the planned takeover by Qualcomm — the dominant producer of chips for mobile devices — of Dutch manufacturer NXP Semiconductors NV.

“What is the true highest price at which you would be prepared to acquire Qualcomm? Is it [US]$82 per share or is it higher?” Jacobs said.

The letter said the bid “ascribes no value” to NXP or to Qualcomm’s plans to roll out new devices for the fifth generation of wireless networks.

“Your proposal is inferior relative to our prospects as an independent company and is significantly below both trading and transaction multiples in our sector,” Jacobs wrote.

Broadcom, which has begun a process to reincorporate in the US, called its sweetened bid on Monday its “best and final offer.”

The rich offer puts pressure on Qualcomm, which is set to hold its annual shareholders’ meeting next month.

In a letter to Qualcomm board members this week, Tan called the offer “extremely compelling compared to any other alternative available to Qualcomm” and called on the board to open talks on the proposal, but he said the deal would be off the table if it fails to win shareholder approval.

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