Qualcomm Investors Want Bump of $10 a Share From Broadcom

Qualcomm investors want at least $10 more than the $70-a-share Broadcom is offering. If history is any guide, they might get partway there, according to Bloomberg.

Qualcomm’s board rejected Broadcom’s $105 billion acquisition offer Nov. 13, saying it was too low. Broadcom, which hasn’t yet improved its proposal, said it remains “fully committed“ to the purchase and has received positive feedback from investors and customers. For now shareholders seem to be siding with Qualcomm. But Broadcom CEO Hock Tan is a tough negotiator and Qualcomm has big problems.

Tan has been the leading actor in a wave of deals that have shaken up the $300 billion chip industry over the last two years. He’s put together a string of transactions that have more than doubled the size of his company and were applauded by investors who have bid up Broadcom’s stock. Part of what they like is Tan’s ability to cut a deal on his terms.

In his three largest purchases, for LSI, Broadcom and Brocade, Tan hasn’t paid more than 6.8 percent over his opening offer, according to regulatory filings. While investors may not like Broadcom’s opening salvo, Qualcomm’s multiple challenges have tried their patience and undermined their confidence in the company’s future.

In its response to Broadcom’s offer, Qualcomm’s board cited confidence in the company’s future growth prospects and management’s ability to deliver. Qualcomm has said the ongoing dispute with Apple, which has stopped paying billions of dollars in licensing fees, is a commercial negotiation they will resolve. The record fines levied in Korea and Taiwan, and the U.S. antitrust investigation were prompted illegally by Apple and will be seen off in the courts, they’ve said.

While Qualcomm has resolved such disputes before, investors are concerned there are too many issues that will take too long to fix. Broadcom’s timing may be good in that regard and some investors are considering whether fresh leadership might unravel some of Qualcomm’s entanglements more quickly.