Qualcomm rejected Broadcom’s unsolicited bid to acquire its operations for $130 billion including $25 billion in debt, the San Diego, California-based company said Monday. In a prepared statement, the semiconductor giant revealed that the decision to dismiss the offer was made by its Board of Directors in a unanimous manner, stating that the offer “significantly undervalues” Qualcomm, both in terms of its existing performance and future prospects in the mobile and other segments. Qualcomm Chief Executive Officer Steve Mollenkopf hailed the successes of the firm’s smartphone, Internet of Things, networking, automotive, and general computing divisions, stating that this unique mix of historically strong units makes Qualcomm much more valuable than the figure cited by Broadcom.
The proposal included paying a relatively small premium on Qualcomm stock which was worth north of $61 when Broadcom publicized its intentions to attempt acquiring the company last week, offering $70 per share which it would mostly pay in cash, with $10 being given to existing investors as shares of the combined entity. While the semiconductor company was largely expected to reject the bid, the sole existence of a high-profile suitor drove up its stock to $64.57 when trading ended on Friday, with some industry watchers expecting its value to go up in the aftermath of the decision. Besides saying the offer undervalues the company, Qualcomm also described the proposal as having “significant regulatory uncertainty” attached to it, referring to numerous antitrust probes the deal would be subjected to even if the two managed to come to an agreement.
Qualcomm provided no further comments on the matter and explicitly stated it will not reflect on the bid for the second time in the future. The new development doesn’t necessarily mark the end of the matter, with Qualcomm’s move only being expected to stall Broadcom’s acquisition attempt that’s likely to lead to a proxy fight between the two technology giants. Should Broadcom be able to convince enough minor investors to sell, Qualcomm’s board wouldn’t be able to stop the move from going through. A major stock buyback may be the first step in the semiconductor company’s efforts to resist the bid which proposes the largest tech acquisition ever, though no official confirmation of such a move has been provided by the firm.