Qualcomm announced Monday that it has rejected rival chipmaker Broadcom's acquisition offer of 70 USA dollars per share, saying the bid price was too undervalued to be accepted. Indeed, insiders had suggested that the company had considered offering as much as $80 per share in its opening bid - implying that it has room and resources to dramatically raise its offer.
"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", Paul Jacobs, Qualcomm's executive chairman and chairman of the board, said in an official statement released Monday.
Qualcomm also said the offer poses "significant regulatory uncertainty" for the firm, adding that strategy being executed by Mollenkopf is "far superior" in value to its stockholders than the proposed offer.
"No company is better positioned in mobile, IoT, automotive, edge computing and networking within the semiconductor industry".
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Broadcom, a California-based semiconductor device supplier, gave Qualcomm the offer last week. The deal would dwarf Dell Inc.'s $67 billion acquisition of EMC in 2015 - then the biggest in the technology industry.
The deal will comprise $70 a share in cash and stock for the business, although it's been valued at a mammoth $130 billion, including $25 million debt.
Tan said he's pleased with the reaction he's already received from Qualcomm shareholders and customers regarding his proposal and would prefer to keep the negotiations friendly. Nevertheless, all signs are pointing up for Qualcomm, given the potential for a higher bid from Broadcom. If it does sell to Broadcom, it means the combined businesses' chips will be present in more than a billion smartphones sold every year. But analysts say Broadcom still has some cards to play: It could simply sweeten its bid, of course, or as Bloomberg pointed out, it could wage a proxy battle by bringing its offer directly to Qualcomm shareholders.