Qualcomm will reportedly reject Broadcom's offer

Qualcomm will reportedly reject Broadcom's offer

Qualcomm will reportedly reject Broadcom's offer

United States semiconductor and telecommunications firm Qualcomm rejected a $103bn takeover bid from competitor Broadcom on Monday, saying the offer "dramatically" underestimated the value of the company.

Paul Jacobs, Executive Chairman and Chairman of the Board of Qualcomm Inc. said this about the potential acquisition.

Qualcomm's board concluded that "Broadcom's proposal dramatically undervalues Qualcomm and comes with significant regulatory uncertainty", said Tom Horton, Qualcomm's presiding director, said in the company's statement. Under Broadcom's proposal, Qualcomm stockholders would receive per share and it will consist of $60.00 in cash and $10.00 per share in Broadcom shares.

Due to several reasons, Qualcomm has rejected Broadcom's $130 billion offer and will continue to operate as a separate entity for now.

At the time, some Wall Street analysts said Qualcomm might turn down the deal.

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"This transaction will create a strong, global company with an impressive portfolio of industry-leading technologies and products, and we have received positive feedback from key customers about this combination", says Broadcom chief Hock Tan.

With that amount of money, one has to imagine that Qualcomm at least considered the offer. But antitrust authorities already have challenged Qualcomm's business practices in several countries, and the combined companies would hold a dominant position in the wireless industry.

QCOM shares traded as high as $80 just a few years ago, so it makes sense that the company wouldn't be ecstatic with a $70 takeover offer.

Qualcomm provides chips to carrier networks to deliver broadband and mobile data. "It adds flexibility to the Qualcomm side because they realize there's enhanced value in getting this settled quickly: a better chance of staying independent", he said. Sources told Reuters that prior to Qualcomm's official rejection, Broadcom was already considering a larger bid.

The company's decision to decline what would be the biggest-ever tech deal simply opens the door for the inevitable proxy battle that will ultimately decide the fate of the chipmaker.

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