Broadcom has been wanting to get a hold of Qualcomm to become even bigger. Last November, we heard of its plan to acquire Qualcomm in a massive $121 Billion deal. We’re not just talking about millions but billions here. It sounded like the perfect plan but Qualcomm was trying to fight Broadcom bid. The board had planned a strategy and now it has officially and unanimously rejected the offer. That is a lot of money but Qualcomm’s board was firm with the decision. The fight isn’t over yet because shareholders can decide otherwise next month.
According to Qualcomm, the offer undervalues the company. It also “falls well short of the firm regulatory commitment” as per an official statement. The bid is already higher at $82 compared to the original $70 per share given last November. Qualcomm isn’t really snobbish but the board knows the worth of the company. There is a possibility it will happen though because in March, shareholders will vote for new board members.
If the new board members will be in favor of the Broadcom bid, then the acquisition will become a reality. This is plain business but we’re interested to know what may happen in the next few months.
Qualcomm’s Board Chairman Paul Jacobs told Broadcom in a letter: “Your proposal is inferior relative to our prospects as an independent company and is significantly below both trading and transaction multiples in our sector.” For Broadcam, the offer is one of its biggest moves yet but it seems Qualcomm is not impressed.
To be honest, Qualcomm isn’t exactly in its best form because of several challenges and issues the company has faced the past few years. Broadcom’s offer may do good for the San Diego-based chipmaker so let’s wait and see.
SOURCE: Qualcomm
