Broadcom isn’t taking no for an answer in its effort to take over Qualcomm. But whether Broadcom is willing to make an offer Qualcomm can’t refuse still isn’t clear.
Broadcom made an unsolicited bid last week to pay $70 per share in a deal that would value the San Diego-based chipmaker at $130 billion, including $25 billion in net debt. Qualcomm said yesterday that its board had unanimously rejected the offer, claiming it undervalued the company and faced regulatory uncertainty.
Broadcom restated its intention to get Qualcomm to come to terms, noting that its previous offer—which consisted of $60 in cash and $10 in Broadcom stock per share—marked a 28% premium over the closing price of Qualcomm’s shares on Nov. 2, the last day to have been unaffected by media speculation of a deal. Broadcom also said its proposal stands regardless of whether Qualcomm’s pending acquisition of NXP closes under its current terms or is nixed.
“This transaction will create a strong, global company with an impressive portfolio of industry-leading technologies and products, and we have received positive feedback from key customers about this combination,” Broadcom CEO Hock Tan said in a prepared statement. “We continue to believe our proposal represents the most attractive, value-enhancing alternative available to Qualcomm stockholders and we are encouraged by their reaction. Many have expressed to us their desire that Qualcomm meet with us to discuss our proposal. It remains our strong preference to engage cooperatively with Qualcomm’s board of directors and management team.”
Importantly, Broadcom didn’t immediately up its bid for the competitor, and it isn’t at all clear that Qualcomm is interested in satisfying Tan’s “strong preference” of engaging cooperatively. But analysts say Broadcom still has some cards to play: It could simply sweeten its bid, of course, or as Bloomberg pointed out, it could wage a proxy battle by bringing its offer directly to Qualcomm shareholders. (It could also make both moves, of course, targeting shareholders with better terms than the first proposal held.) Or, as Barron’s pointed out, Broadcom could make more hostile moves, such as trying to nominate allies to Qualcomm’s board.
With a range of potential strategies available, it seems the one tactic Broadcom isn’t trying—at least for now—is simply walking away from a deal.