Qualcomm’s board of directors unanimously rejected the unsolicited $103 billion takeover offer Broadcom made a week ago.
Broadcom, which is based in Singapore but has announced plans to return to the United States, proposed last week 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.
But Qualcomm this morning spurned the offer, saying it “undervalues” the San Diego-based chipmaker and may not pass muster with regulators.
“It is the board’s unanimous belief that Broadcom’s proposal significantly undervalues Qualcomm relative to the company’s leadership position in mobile technology and our future growth prospects,” said Qualcomm board Chair Paul Jacobs said in a press release.
Qualcomm CEO Steve Mollenkopf echoed Jacobs’ thoughts, saying the company is well-positioned to tap a range of burgeoning tech segments.
“No company is better positioned in mobile, IoT automotive, edge computing and networking within the semiconductor industry,” Mollenkopf said. “We are confident in our ability to create significant additional value for our stockholders as we continue our growth in these attractive segments and lead the transition to 5G.”
Qualcomm in July posted $5.4 billion in revenue in the previous quarter, down 11% year over year, and income fell a whopping 40% due primarily to a patent battle with Apple that began in January and continues to rage. Reports surfaced last week that Apple was considering eschewing Qualcomm chips entirely in its iPhones and iPads beginning next year in what would a major blow for the San Diego-based chipmaker.
Analysts have speculated that a tie-up between Broadcom and Qualcomm could help alleviate the damage from that battle, however. Broadcom is also a major supplier of parts for Apple’s iPhone, and new management might be better positioned to resolve the dispute, Bloomberg noted last week.
But Qualcomm’s rejection doesn’t exactly come as a surprise considering Qualcomm’s ongoing effort to acquire NXP and the value of its patent holdings. Broadcom, which has yet to issue a statement in response to Qualcomm’s rejection, may opt to up the offer for its rival.