Janina Lim – Fourth Estate Contributor
San Diego, CA, United States (4E) – Qualcomm Inc. rejected Broadcom Ltd.’s $105 billion acquisition offer which could have been the largest electronics acquisition in history as the San Diego-based firm shunned the value as an opportunistic attempt to take over.
“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 Paul Jacobs, executive chairman and chairman of the board of Qualcomm, in a statement.
The communications chipmaker on Nov. 6 offered Qualcomm a buyout at $70 per share in cash and stock. The deal also covers $25 billion of net debt, the proposed tie-up is estimated at about $130 billion on a pro forma basis.
Broadcomm Chief Executive Officer Hock Tan seeks the combined business to build a powerhouse to lead the market as the default provider for wireless chips needed to build each of the more than a billion smartphones sold annually.
With such a large amount involved in the deal, the acquisition makes for a more difficult case to close compared with Qualcomm’s $40 billion purchase of NXP Semiconductors NV, a pending pact which currently faces regulatory scrutiny in the international front.
Tan said his hundred-billion dollar offer for Qualcomm remains regardless if its’ acquisition of NXP pushes through or not.
The thumbed down offer was expected to push Broadcom’s ranking to be the third-largest chipmaker for mobile phones, following Intel Corp. and Samsung Electronics Co., and bump off Dell Inc.’s $67 billion acquisition of EMC in 2015 in the technology industry’s list as the biggest buyout of a company.
Stocks of Qualcomm, which saw a rally following reports of the offer, has traded below the bid price as doubts gradually cast over the transation pushing through.
Its shares ended last week little changed at $64.57 versus a 50 percent surge by Broadcom’s shares and a 44 percent rally by the benchmark Philadelphia Stock Exchange Semiconductor Index.
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