Qualcomm rejects Broadcom director nominees, likely escalating proxy fight

Qualcomm CEO Steve Mollenkopf

Shares of Qualcomm rose marginally after the company rejected all 11 of the nominees proposed by Broadcom and Silver Lake Partners to join its board. But the fight over control of the San Diego-based chipmaker will likely rage on.

Broadcom, which is based in Singapore but has announced plans to return to the United States, last month made an unsolicited offer of $103 billion to take over its rival. Qualcomm quickly rejected that offer, prompting Broadcom to announce plans to nominate 11 members to Qualcomm’s board and “to propose certain other matters for the consideration of Qualcomm stockholders” in an effort to acquire the company.

But Qualcomm said this morning its board had unanimously voted to reject those candidates.

“After a thorough review of the Broadcom-Silver Lake nominees, the Governance Committee concluded that these nominees are inherently conflicted and would not bring incremental skills or expertise to the Qualcomm board,” Qualcomm said in a press release. “Broadcom and Silver Lake are asking Qualcomm stockholders to turn over control of their company now to the hand-picked Broadcom-Silver Lake nominees based on a proposal that dramatically undervalues Qualcomm and is not actionable due to its significant regulatory uncertainty, which may not be resolved for 18 months, if ever, and lack of committed financing. Broadcom has made no commitments to resolve the serious regulatory issues inherent in its proposal.”

The rejection likely escalates a proxy war for Qualcomm, which is expected to host its annual investor meeting in March or April. Broadcom has already begun traveling to negotiate with Qualcomm investors directly, according to TheStreet.

Silver Lake, which is an investor in Broadcom, helped recruit the nominees, according to Reuters.

Shares of Qualcomm were up 0.36% at one point this morning.