Qualcomm Rejects Revised Buyout Offer of Broadcom
Qualcomm Inc., a U.S. semiconductor company, declined the revised $121 billion buyout offer of Broadcom Ltd, a U.S. developer and digital semiconductor company.
The response of Qualcomm attempts to strike a balance between continued resistance of Broadcom’s attempt to takeover and heeding the calls of some shareholders of Qualcomm who urged the company to engage with its rival in case it can settle a deal.
According to Broadcom, it proposed a meeting this weekend, but the California-based semiconductor company was not willing to meet until Tuesday, after the respective meetings of the two companies with Glass Lewis and ISS.
“We hope that your willingness to meet with us reflects Qualcomm's genuine intent to reach an agreement with respect to our February 5 proposal,” Hock Tan, CEO of Broadcom, said in a letter to Paul Jacobs, the Executive Chairman of Qualcomm.
Broadcom stated that its latest offer was “best and final” and that the offer has a strong Qualcomm stockholder support.
November last year, Qualcomm rejected the first unsolicited $103 billion acquisition offer of Broadcom. In response, Broadcom nominated a slate of directors to change the board of Qualcomm.
Meanwhile, the shareholders of Qualcomm are scheduled to vote on these nominations on March 6.
According to Qualcomm, the latest $82 per share offer of Broadcom, comprising $60 per share in cash and $22 per share in stock, “materially undervalues” the company.
The shares of Qualcomm, on the other hand, increased 1.1 percent at $63.12 in after-hours trading on Thursday, while Broadcom shares went up 1 percent at $232.00.
Broadcom also promised to pay a breakup fee of $8 billion in the event regulators thwart the deal, as well as a “ticking” fee of 6 percent per year on the cash portion of the consideration if the deal takes more than 12 month to close.
On Thursday, Qualcomm claimed that this would not compensate the company if some large customers were to walk away or overstep their licensing agreements.
Qualcomm also believes that Broadcom needs to offer a “hell-or-high-water” legal commitment to complete the deal.
“If you are not willing to agree to do whatever is necessary to ensure a transaction closes, we will need you to be extremely clear and specific about exactly what actions you would refuse to take, so that we can properly evaluate the risk to Qualcomm's shareholders,” Jacobs stated in a letter to Tan.
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Ericka Henderson | February 09, 2018