Sci-tech

Qualcomm denies $130bn rival takeover

Qualcomm denies $130bn rival takeover

Broadcom and Qualcomm battled through press releases on Monday while investors tried to figure whether the two semiconductor giants would actually merge.

Broadcoms offer was for $70 a share – valuing Qualcomm at just north of $100 billion dollars (the deal would include $25 billion of debt).

Qualcomm's stock has fallen 5% this year.

"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 of Qualcomm Incorporated. The language, obviously, left open the door to a higher bid. Qualcomm has agreed to buy NXP, and Broadcom is buying Brocade. After a comprehensive review, conducted in consultation with our financial and legal advisors, the Board has concluded that Broadcom's proposal dramatically undervalues Qualcomm and comes with significant regulatory uncertainty.

The right price for Qualcomm could be between $80 and $85 per share, and Broadcom could go up to $90, Susquehanna analyst Christopher Rolland told Reuters.

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Tom Horton, Presiding Director for Qualcomm also believes that the management is focused on increasing value for shareholders.

That was a not-so-veiled threat to pursue a hostile takeover if necessary.

Qualcomm said Monday that it's in a unique position to grow on its own. Broadcom on November 6, 2017 made an unsolicited $103 billion bid for the company. Hence, Broadcom's bid for the company was a surprise when the news emerged few days back.

The bid takes advantage of Qualcomm's weakened position after a year marred by conflicts with Apple Inc. over its patent royalty fees and worldwide regulators alleging anticompetitive business practices.

Singapore-based Broadcom made the offer last week in what would have consolidated two major players in the booming sector fueled by growth in smartphones and other connected devices. Qualcomm's profit in the fiscal year ended September 24 plummeted 57%, and its share price sank about 18% in the 12 months leading up to the bid. Broadcom's (avgo) shares, up nearly 50% so far this year, were largely unchanged on Monday at $264.28.


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