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Broadcom after rejection: 'Fully committed' to Qualcomm buyout

Broadcom after rejection: 'Fully committed' to Qualcomm buyout

Broadcom said there are "compelling financial benefits" to such a deal and Qualcomm's portfolio and global market reach would be complementary to Broadcom's business.

Qualcomm rejected an unsolicited, $103 billion offer from Broadcom, saying that the proposal is significantly undervalued and that a tie-up between the massive chipmakers would face substantial regulatory resistance.

Broadcomm says it will continue its efforts to acquire rival chip designer Qualcomm despite a unanimous rejection of its $103bn buyout offer. 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.

Qualcomm's board believes that Broadcom's proposal significantly undervalues Qualcomm given its leadership position in mobile technology and their future growth opportunity.




Paul Jacobs, Executive Chairman and Chairman of the Board of Qualcomm Inc. said this about the potential acquisition.

ZDNet has reached out to Broadcom and will update if we hear more.

As such, Qualcomm expects to generate "significant additional value" for shareholders in the future, especially with the prospect of 5G networking on the horizon. 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.

Broadcom CEO Hock Tan, who said earlier this month he would redomicile his company to the United States from Singapore, has stated he is open to launching a takeover battle. Qualcomm and Broadcom did not immediately respond to requests for comment. Qualcomm investors would get a $60 payment and $10 of equity in Broadcom for every share of Qualcomm stock they own. If Broadcom makes a hostile bid, Qualcomm's governance rules would allow the rival to submit its own slate for the entire 11-member board by the December 8 nomination deadline. If the deal goes through as proposed, it would be the largest technology acquisition ever.

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