Published: Wed, November 15, 2017
Tech | By Dwayne Harmon

Qualcomm Rejects $130 Billion Broadcom Merger Proposal

Broadcom offered to buy Qualcomm at $70 per share.

Inside sources claim that Qualcomms board of directors will reject Broadcoms offer to acquire the Snapdragon chip designer.

Qualcomm said the bid "dramatically undervalues" the company and, in a nod to widespread competition fears about the deal, it noted that that a takeover would come with "significant regulatory uncertainty".

"No company is better positioned in mobile, IoT (internet of things) automotive, edge computing and networking within the semiconductor industry", Mollenkopf said, in Qualcomm's statement. "We continue to believe our proposal represents the most attractive, value-enhancing alternative available to Qualcomm stockholders". Last week, the company had confirmed the news that it had received a non-binding, unsolicited proposal from Broadcom Limited.

Canaccord Genuity analyst Michael Walkley boosted his price target for Qualcomm stock from $76 to $83 per share because he expects a higher bid. Broadcom CEO Hock Tan, famed for his M&A expertise in the chip industry, said Qualcomm shareholders told him that they were interested in the deal.

The deadline is December 8 for Broadcom to submit a slate of alternative candidates to Qualcomm's 11-member board of directors to push the deal through. However, he agrees that the potential exists for "a fully-hostile bid", based on Broadcom's response and the fact that Qualcomm's board nomination deadline is nearing.

Broadcom's proposal followed Tan's visit to the White House this month, where he met President Donald Trump and announced plans to move the tech company back to the United States from Singapore. Qualcomm, meanwhile, is in the process of buying NXP Semiconductors NV for $40 billion. And that doesn't take into account ending Qualcomm's royalty rate feuds with Apple (aapl) and another unidentified phonemaker that are costing the company another $3 billion a year or more.

Qualcomm believes the shareholders' best interest lies in the hands of current management. Qualcomm wants to power and connect every future device, an ambition it's not confident it could achieve while operating as a joint venture with Broadcom.

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