Mobile chipmaker Qualcomm has rejected its opponent’s $103-billion takeover offer, saying the offer from Broadcom underestimated the organization and would face administrative obstacles.
Shares of Qualcomm were up 1.8 percent at $65.74 in early evening trading, while Broadcom’s were down 0.4 percent at $263.95. Broadcom said it would try to connect with Qualcomm’s board, and that it had gotten a positive criticism from key clients and investors.
“It is the Board’s unanimous belief that Broadcom’s proposal significantly undervalues Qualcomm relative to the company’s leadership position in mobile technology and our future growth prospects,” said Paul Jacobs, Executive Chairman and chairman of the Board of Qualcomm, in a statement.
The two organizations both consider Apple one of their best clients. Investigators said an arrangement between them would enable Qualcomm to settle its fight in court with the iPhone producer, as Broadcom has a closer association with Apple. Broadcom made a spontaneous offer last week to purchase Qualcomm to become the prevailing chip provider utilized for the 1.5 billion cell phones expected to be sold next year. Examiners said Broadcom should be able to raise its offer, go for an intermediary battle, or dispatch an unfriendly trade offer.
Broadcom said Monday it remains committed to the deal. “We continue to believe our proposal represents the most attractive, value-enhancing alternative available to Qualcomm stockholders,” Broadcom CEO Hock Tan said in a prepared statement.
The correct cost for Qualcomm could be between $80 and $85 per offer, and Broadcom could go up to $90, Susquehanna investigator Christopher Rolland told Reuters. Any arrangement could bring investigation from the antitrust controllers, who are examining Qualcomm’s $38-billion acquisition of car chipmaker NXP Semiconductors NV.
“After a comprehensive review, conducted in consultation with our financial and legal advisors, the board has concluded that Broadcom’s proposal dramatically undervalues Qualcomm and comes with significant regulatory uncertainty,” said Tom Horton, the company’s Director. “We are highly confident that the strategy Steve and his team are executing provides far superior value to Qualcomm shareholders than the proposed offer.”