Will Qualcomm go ahead with the takeover, or put up a fight for a bigger lump sum?
Just last week bidding begun as Broadcom attempted to take over rival chipset maker Qualcomm in a multi-billion dollar deal, which is now expected to be rejected.
Despite $103bn on the table, Qualcomm is set to reject Broadcom’s offer with sources stating that the bid ‘undervalued’ the company, according to reports from Reuters.
Furthermore, the sources said that the offer does not price the uncertainty associated with getting the deal approved by regulators.
Reuters also reported that Broadcom is preparing a slate of directors by 8 December – Qualcomm’s nomination deadline. This would then allow Qualcomm shareholders to cote to replace the company’s board and force it to engage in negotiations with Broadcom.
Sources also said that Broadcom would be prepared to up its offer for its wireless rival, with increased debt financing also a viable option.
Broadcom’s unsolicited all-cash-and-shares bid would see Qualcomm shareholders get $70 per share, with $60 in cash and $10 in stocks.
“Broadcom’s proposal is compelling for stockholders and stakeholders in both companies. Our proposal provides Qualcomm stockholders with a substantial and immediate premium in cash for their shares, as well as the opportunity to participate in the upside potential of the combined company,” said Hock Tan, President and Chief Executive Officer of Broadcom.
In what could shape up to be one for the biggest takeover battles ever seen, Qualcomm has already reacted to the initial bid by Broadcom, saying that it would review the proposal and act in the best interests of its shareholders.
The move by Broadcom is an astute one, with Qualcomm in a vulnerable position thanks to its shares being held in a legal dispute with Apple. Added to this are concerns that last year’s $38 billion offer for NXP Semiconductors may have to be increased by the company.