Qualcomm has officially confirmed that it is to reject the buyout bid from smaller rival Broadcom, claiming the near-£100 billion offer is simply too small.
Broadcom announced its intention to buy Qualcomm earlier this month, offering £98.8 billion to pick up its rival lock, stock, and barrel, with or without Qualcomm's own acquisition of NXP Semiconductor going through. The offer was enough to raise eyebrows thanks to the staggering disparity in size between the two companies, with Broadcom effectively announcing it would swallow a company twice its size.
'Our proposal provides Qualcomm stockholders with a substantial and immediate premium in cash for their shares, as well as the opportunity to participate in the upside potential of the combined company,' claimed Hock Tan, Broadcom president and chief executive, of the deal at its announcement. 'This complementary transaction will position the combined company as a global communications leader with an impressive portfolio of technologies and products.'
Qualcomm, however, disagrees. Having taken a week to consider the unsolicited buyout offer, the company has opted to reject it with a unanimous vote. 'It is the Board's unanimous belief that Broadcom's proposal significantly undervalues Qualcomm,' claims Paul Jacobs, executive chair and chair of the board of Qualcomm, in a press release regarding the offer, 'relative to the company's leadership position in mobile technology and our future growth prospects.'
'The Board and Management are singularly focused on driving value for Qualcomm's shareholders. After a comprehensive review, conducted in consultation with our financial and legal advisers, the Board has concluded that Broadcom's proposal dramatically undervalues Qualcomm and comes with significant regulatory uncertainty,' adds Qualcomm presiding director Tom Horton. 'We are highly confident that the strategy Steve [Mollenkopf, Qualcomm chief executive] and his team are executing on provides far superior value to Qualcomm shareholders than the proposed offer.'
Broadcom is expected to make a counter-offer, but has not yet done so.