Sunday, 09 December, 2018

Qualcomm board unanimously rejects revised Broadcom offer

Trader on the move The bulls are back
Nellie Chapman | 09 February, 2018, 02:32

Qualcomm Inc. has rejected Broadcom Ltd.'s "best and final offer" for the semiconductor maker but offered to meet with the company to negotiate better terms.

On Monday, Broadcom offered to buy the United States chip maker for $82 per share, a 50 percent premium on the firm's share price on November 2 2017 and a 56 percent premium on the last 30 days as a weighted average.

"The Qualcomm board, assisted by its financial and legal advisors, determined that the Broadcom proposal 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", the company said. The deal was turned down by Qualcomm's Board of Directors later that same month, but a report quickly followed this up suggesting that Qualcomm would reconsider its decision if Broadcom offered more money.

In the letter, Qualcomm board said it is seeking clarity on whether Tan would be willing to up the price.

At that time, Tan offered $70 per share for Qualcomm, which the board rejected as being too low. Tan: I am writing on behalf of the Board of Directors of Qualcomm Incorporated. As presented, your proposal raises more questions than it answers.

The new offer would increase the cash amount payable to Qualcomm stockholders if the deal fails to close in one year - as well as pay a significant but undisclosed break-up fee should global regulators block the deal.

"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". "Is it $82 per share or is it higher?" The most recent such fine levied against the San Diego company came from the European Union, which accused Qualcomm of breaking the EU's antitrust laws to the tune of $1.23 billion.

"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 said.

The board also said it would be "extremely important" that Broadcom commit to any means necessary of clearing the likely regulatory hurdles it would face with the purchase. In addition, it wants to know what steps he would take to ensure the deal closes.

Qualcomm shareholders are scheduled to vote on these nominations at a March 6 meeting.