Broadcom sent over a new bid for acquiring Qualcomm earlier this week. It was said to be Broadcom’s “final” offer for Qualcomm. Today, Qualcomm’s board of directors voted on the takeover bid and unanimously rejected the offer. Stating that the offer undervalues Qualcomm. It also presents a negative risk should the acquisition fail when going through the regulators. Qualcomm has offered to meet with Broadcom about coming together on a better deal.
The deal that Broadcom offered Qualcomm this time around was for $82 per share, which would be $60 per share of Qualcomm’s stock and then $22 in Broadcom stock. This was after Broadcom offered to purchase Qualcomm for $70 per share back in November. In a letter from Qualcomm’s chairman, Paul Jacobs, to Broadcom’s president, he mentions that this proposal from Broadcom raises more questions then it answers. This includes whether Broadcom will do whatever it takes to get this deal to be approved by regulators. Which is going to be a big deal, considering the fact that it is very possible that the deal could be broken up. And from the information that was made public, Broadcom has not mentioned anything about a breakup fee. The other issue that Jacobs outlined in his letter is the fact that there was no valuation for NXP. A semiconductor company that Qualcomm is acquiring itself. That acquisition isn’t quite final yet, but it has gotten the green light in Europe.
Broadcom has been looking to acquire Qualcomm over the past few months, in a hostile takeover. Meanwhile Qualcomm had been working on acquiring NXP for the past year or so, a deal that still hasn’t gone through yet. Making it a rather interesting time in the semiconductor space right now. After Qualcomm’s board of directors unanimously rejected the offer from Broadcom, both companies stocks started to shoot up more than 5%. Which shows that the shareholders aren’t really interested in a Broadcom acquisition of Qualcomm, on either side. And that should be the case, as you have a competitor acquiring another competitor, and that’s not always a good thing, especially after Qualcomm has already pretty much acquired NXP.