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Qualcomm rejects $121-billion Broadcom offer

Qualcomm rejects $121-billion Broadcom offer

Qualcomm offered to meet with Broadcom and provided a list of issues to address in order to further the conversation. The chipset manufacturer surprisingly, had the same reason for denying the massive bid.

In a letter to Broadcom's CEO, Qualcomm outlined a number of questions it wants answered in talks with Broadcom, including whether this is really the company's "final" price, or could it pay more than Dollars 82 per Qualcomm share. Today, Broadcom said that the offer includes $82 per share and it is their 'best and final'.

Broadcom's offer represents a 50% premium over the closing price of Qualcomm common stock on November 2, 2017, the last unaffected trading day prior to media speculation regarding a potential transaction, and a premium of 56% to Qualcomm's unaffected 30-day volume-weighted average price. There is a possibility it will happen though because in March, shareholders will vote for new board members. Any merger deal would need to pass muster with regulators in the United States and other markets.

Specifically, the company is offering to pay a hefty $8 billion termination penalty in the event that the merger is accepted by Broadcom but doesn't receive regulatory approval.

Broadcom has been eyeing Qualcomm for quite a while. However, reports have emerged that Qualcomm's leadership is fiercely opposed to the deal. This makes things interesting in the semiconductor arena.

Ultimately, Qualcomm doesn't think Broadcom's offer is all that appealing, especially if it seems that the company doesn't appreciate the value from its recent acquisition of NXP Semiconductor. NXP shares closed at $115.94 on Thursday, indicating investors were expecting a sweeter deal.

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If you want to fight with Broadcom, you'd better be willing to put in some overtime.

The Financial Times cited sources close to Qualcomm as saying that the breakup fee won't be enough to win over the board.

"We urge you to meet with us without further delay, and stand ready to meet this Saturday or Sunday in NY or another mutually convenient location", Tan wrote, hammering the point home with the closing: "We look forward to meeting with you promptly". "If Qualcomm agreed to be acquired by Broadcom and the deal failed to close after extended regulatory review, Qualcomm would be enormously and irreparably damaged", Jacobs wrote. "Is it $82 per share or is it higher?"

"Your proposal ascribes no value to our accretive NXP acquisition, no value for the expected resolution of our current licensing disputes and no value for the significant opportunity in 5G." said Qualcomm in a statement.

"It is indisputable that there are significant regulatory hurdles in your proposed transaction".

Broadcom then ramped up the pressure and targeted individual shareholders in an attempt to gain influence from the inside of the U.S. chip giant.