Qualcomm has announced today that the Board of Directors has rejected Broadcom’s proposal to acquire the company for around $105 billion. The BOD believes that Broadcom’s offering undervalues Qualcomm and its growth perspectives in the upcoming 5G era.

Last week Broadcom offered to buy all of the outstanding shares of Qualcomm for $105 billion in total for cash and stock. Under the terms of the deal, shareholders of Qualcomm would get $60 in cash and $10 in Broadcom’s stock for each share, which would be a 28% premium over the price of a Qualcomm share on November 2, 2017.

Broadcom wanted to buy Qualcomm primarily because of its LTE and 5G technologies to complement its other telecommunication assets. Qualcomm itself is in process of taking over NXP Semiconductor. The latter is a leading supplier of electronics for automobiles and when Qualcomm gets NXP, it will be particularly well positioned to become a leading maker of chips for self-driving and electric vehicles.

“No company is better positioned in mobile, IoT, automotive, edge computing and networking within the semiconductor industry,” said Steve Mollenkopf, CEO of Qualcomm. “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.”

Shares of Qualcomm have been declining in value in the recent quarters, which is why Broadcom made its proposal. Meanwhile, Qualcomm is a larger company than Broadcom is — it earns $23 billion a fiscal year (vs. $16.93 billion earned by Broadcom) and it has 33,800 employees (vs. 15,700 employed by Broadcom).

Qualcomm’s board believes that Broadcom’s proposal not only undervalues the company but also “comes with significant regulatory uncertainty”. The latter claim may indicate that Qualcomm’s Board Of Directors may not be interested in the potentially record-setting transaction even if Broadcom increases its bid.

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Source: Qualcomm

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  • willis936 - Monday, November 13, 2017 - link

    Exclusive! Photo from hidden camera inside board room.

  • Samus - Tuesday, November 14, 2017 - link

    Photo from hidden camera of average share holder:

  • rpg1966 - Monday, November 13, 2017 - link

    Standard reponse from target company.

    Funny how the target company always values itself *way* higher than the market does. Even current price + 28% (in this case) isn't enough!
  • quiksilvr - Monday, November 13, 2017 - link

    Qualcomm is literally twice the company Broadcom is and 5G is going to be huge. Strategically Broadcom should have offered this back in the beginning of 2016 when the Qualcomm's stock tanked to a little over 40.

    This isn't like Microsoft attempted to buy Yahoo for $48 billion. Yahoo was very much on the decline and idiotically rejected the deal when a much MUCH larger company had interest. Now they got sloppy seconds by Verizon for 1/10th the price and more people use Bing than Yahoo for search.
  • dgingeri - Monday, November 13, 2017 - link

    If you're comparing it to the old Broadcom, you'd be right. The company known as Broadcom today was known as Avago not long ago. They're a financial powerhouse that has been gobbling up tech companies for a decade, led by certain Democrat politically connected ultra rich individuals. You've probably never heard of them, since many aren't even publicly known. The board of directors are simply their henchmen. These people, most men but a few women, own companies such as Citibank, Progressive Insurance, and Comcast. Don't underestimate them.
  • Samus - Tuesday, November 14, 2017 - link

    Exactly, the issue here isn't whether Broadcom and raise the capitol to back there offer (they can) it's that Qualcomm thinks they will grow by 28% in the very near future. It's a gamble that is assuming the stock market will continue this ride.
  • londedoganet - Tuesday, November 14, 2017 - link

    It's rather strange that there's not a peep from the Republicans regarding these links. Perhaps Broadcom's decision to move their legal headquarters back to the USA has mollified them.
  • ganeshts - Monday, November 13, 2017 - link

    Not always. Some companies just accept the proposal / start negotiating (like Brocade and Broadcom probably did when Avago approached)

    Difference is that there is a public roadmap, and there is some internal evaluation on how they are progressing towards achieving what is in the roadmap / whether they can reach even beyond that.

    In any case, short term shareholder value increase is almost always inimical to long term growth. In this case, QCOM might be having a bunch of R&D projects that can generate revenue only 5+ years down the line. If AVGO takes over, rest assured only revenue generating segments of QCOM will remain and the rest will be shuttered / divested. Case in point - the IoT group in Broadcom was sold off to Cypress Semiconductors. But, AVGO probably missed the point that they could have also contributed to shaping the high-performance Wi-Fi products (which are still part of Broadcom)
  • webdoctors - Monday, November 13, 2017 - link

    Currently shows a market cap of 97.6B, obviously the stock has gone up a bit in the last week. The offer is only 5-7% more than the market cap price. QCOM is undervalued right now due to all the lawsuits and $1B fines they're under, but they're P/E ratio is super low. They can only go up from here since their base patent money will never stop.
  • PeachNCream - Monday, November 13, 2017 - link

    Qualcomm was saying right after the offer was made that wouldn't be accepted so this isn't a surprise. Has anyone heard if Broadcom is looking into buying a competitor?

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