Broadcom stepped up its pursuit of rival Qualcomm this morning, announcing plans to nominate 11 members to Qualcomm’s board of directors and “to propose certain other matters for the consideration of Qualcomm stockholders” in an effort to acquire the company.
But the San Diego-based chipmaker doesn’t appear eager to engage in any kind of tie-up.
Broadcom, which is based in Singapore but has announced plans to return to the United States, last month offered to pay $70 per share for Qualcomm in a deal that values the San Diego-based chipmaker at $130 billion including $25 billion in net debt. That offer marked a 28% premium over Qualcomm shares at the time.
Qualcomm’s board of directors unanimously spurned the offer, saying it “undervalues” the San Diego-based chipmaker and may not pass muster with regulators. But Broadcom is continuing to make its case directly to shareholders.
"We have heard from many Qualcomm stockholders who have expressed their desire for Qualcomm to engage with us,” Broadcom CEO Hock Tan said in a public statement. “We also continue to receive positive feedback from customers and, having had initial meetings with certain relevant antitrust authorities, remain confident that any regulatory requirements necessary to complete a combination will be met in a timely manner. Although we are taking this step, it remains our strong preference to engage in a constructive dialogue with Qualcomm. We have repeatedly attempted to engage with Qualcomm, and despite stockholder and customer support for the transaction, Qualcomm has ignored those opportunities. The nominations give Qualcomm stockholders an opportunity to voice their disappointment with Qualcomm's directors and their refusal to engage in discussions with us. In light of the significant value our proposal provides for Qualcomm stockholders, we believe Qualcomm stockholders would be better served by new independent, highly qualified nominees who are committed to maximizing value and acting in the best interests of Qualcomm stockholders."
Qualcomm held firm, though, citing the logistical difficulties of closing any tie-up and touting its position in the burgeoning IoT.
“Broadcom (is) effectively asking stockholders to foreclose options and make a decision now on a non-binding proposed transaction which could not be completed for well over a year, if ever, given the magnitude of regulatory issues, the absence of commitments by Broadcom to resolve those issues, Broadcom’s lack of committed financing, and the uncertainty surrounding its transition from Singapore to the United States,” Qualcomm replied. “Qualcomm is exceptionally well positioned—with technology and leadership positions across mobile, IoT, automotive, edge computing and networking—and leading the transition to 5G. Qualcomm stockholders are poised to participate in substantial growth and value creation as the company continue to execute its strategy across its businesses.”