Qualcomm on Tuesday officially pleaded with its stockholders to stand by the company and its board of directors in order to help it resist a hostile takeover attempt from Broadcom which is trying to seize control of the company as part of an unsolicited $105 billion bid launched last fall. The latest address from the firm repeats its two main arguments against the proposed merger, with its more immediate concern being that the $130 billion offer including $25 billion in debt severely undervalues the San Diego, California-based company. The tech giant’s leadership believes that even if Broadcom was to up its offer to the point that it’s reflective of Qualcomm’s worth, any synergies that the semiconductor company may be hoping to use for delivering additional value to shareholders are a distant ambition and not a realistic possibility.
According to Qualcomm’s estimates, Broadcom would need at least 18 months to deliver the added value it promised to generate with the consolidation and may not be able to do so at all. The notion that the suitor can generate any monetary benefits as soon as the merger is agreed was labeled as “completely false” by Qualcomm. Due to a significant level of regulatory scrutiny the theoretical merger would attract by being by far the largest acquisition in the history of the technology industry, Qualcomm is opposing any attempts to realize it and isn’t interested in bargaining with Broadcom. As a response to the refusal, Broadcom started a proxy takeover war with the chipmaker late last year and is trying to replace its current board with its own nominees which Qualcomm is now calling investors to reject and re-elect its existing directors which it says have much more experience with leading a major tech giant. In simpler terms, Qualcomm is urging investors to vote using the white proxy card and discard any blue cards they receive in the run-up to its annual shareholder meeting scheduled to take place on March 6th.
The company recently publicized a long list of promises to investors, vowing to generate value for them in both the short and medium term even without merging with Broadcom. Its immediate plan to do so largely relies on its acquisition of Dutch firm NXP Semiconductors being approved but even if China — the only remaining regulator that’s yet to greenlight the deal — refuses to clear it, Qualcomm is planning a major stock repurchase as a contingency plan so that shareholders still see significant returns on their investments this year.