Qualcomm shoots down Broadcom's $103 billion takeover offer

Steven Mollenkopf CEO of Qualcomm

Keep in mind, this offer from Broadcom wasn't solicited, so it isn't as if Qualcomm and Broadcom were in talks about a merger before Broadcom plopped its $130 billion bid on the table. Given Broadcom's initial bid for Qualcomm combined with Qualcomm's Board of Directors rejecting the bid, we believe our base case scenario of $6.90 in C2019 pro-forma earnings (with NXP, with royalties from Huawei, and assuming Apple settles at a 50% discount to previous iPhone royalties) is a realistic outcome.

Paul Jacobs, Executive Chairman and Chairman of the Board of Qualcomm states the following in regards to the decision taken by the chipmaker.

This comes after Qualcomm said that the nine men and two women in its board of directors had all agreed that the offered buyout package sorely undervalued Qualcomm's share value and its future growth prospects.

"No company is better positioned in mobile, IoT, automotive, edge computing and networking within the semiconductor industry", Qualcomm's Chief Executive Officer Steve Mollenkopf said in the statement.

"We continue to believe our proposal represents the most attractive, value-enhancing alternative available to Qualcomm stockholders", Broadcom president and CEO Hock Tan in a statement.

Broadcom has shown its willingness to buy Qualcomm regardless of whether it closes the NXP deal. Qualcomm also recognised the deal would have "significant" regulatory hurdles attached.

Qualcomm, which makes the Snapdragon chips found in smartphones and tablets, is the world's No. 3 chip supplier, according to research firm Gartner.

As of 1650 GMT, Qualcomm shares were up 1.78% to $65.72 each and Broadcom had posted a 0.24% uptick to $265.61 per share.

Do you think the deal would have been for or against the interests of Qualcomm?

Finally, it seems the board was concerned about a fight with regulators, even though Broadcom was willing to make some concessions to appease them.

This is just not how these big acquisitions work, usually, these companies sit together, work for a while and try to negotiate important details and then go to the public.

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