A complicated drama is playing out at wireless silicon specialist Qualcomm, thanks to its former chairman, Paul Jacobs. He is reportedly considering stepping down from the board at the chipmaker, after it became known that he was exploring opportunities to acquire the wireless leader and take it private.
People familiar with the matter told the Financial Times that Jacobs approached several investors to explore funding options for a takeover, including Japan’s SoftBank Group, which owns its own silicon company, ARM Holdings. Other sources have said that Jacobs may exit the board.
Last week, Jacobs was stripped of his executive chairman title, likely in an effort to appease the angry shareholders who have increasingly questioned the company’s leadership. That move came as the company tried to fend off a $117 billion hostile takeover bid by rival chipmaker Broadcom, a deal that was quickly blocked by President Donald Trump on the basis of a national security argument.
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Jacobs’ attempt to take Qualcomm private may be a buzzer-beater effort to preserve his family’s influence at the company; his father originally founded the company. But Jacobs now owns less than 1% of Qualcomm, so he would need to pull off a leveraged buyout of more than $120 billion (Qualcomm has a market cap of $88.7 billion), an unprecedented feat. Also, given the fact that the Committee on Foreign Investment in the United States blocked the Broadcom deal (it has a Singapore registration even though it’s run by U.S. citizens and plans to relocate to the U.S.), any effort to court overseas funding sources, such as SoftBank’s Vision fund, seems unlikely to win regulator favor.
But even with low chances of success, the move, if undertaken in earnest, would force the board to evaluate other suitors as part of its fiduciary responsibility, essentially hanging out a “for sale” sign on the San Diego company’s front lawn.
Even without Jacobs forcing the issue, a sale may yet be in the offing for Qualcomm whether the board likes it or not. Qualcomm’s share price is down 6.5% this year, and it also faces a big concern over its cash-cow technology licensing business, after Apple’s successful lawsuit and the loss of the iPhone-maker’s $2 billion in annual royalties. That has led to shareholders expressing deep displeasure with the company’s management, an issue that Qualcomm will be hard-pressed to escape anytime soon.