Qualcomm Rejects Broadcom's Higher $121 Billion Hostile Bid

Qualcomm’s board unanimously rejected a higher acquisition offer from Broadcom, likely leaving the future of the hostile $121 billion proposal to be decided by shareholders next month, according to Bloomberg.

The offer “materially undervalues“ Qualcomm and "falls well short of the firm regulatory commitment“ needed to gain approval for such a transaction, the company said in a statement. Earlier this week, Broadcom raised its proposed price to $82 a share, a bid it called “best and final.“ The deal would take the form of $60 in cash and the remainder in Broadcom shares, a bump of 17 percent from its opening offer in November of $70 a share, which Qualcomm also rejected.

Qualcomm offered to meet with Broadcom and provided a list of issues to address in order to further the conversation. Still, Qualcomm’s second dismissal of Broadcom’s approach may put the decision in the hands of shareholders, who will vote March 6 on whether to replace the smartphone-chip maker’s board with Broadcom’s own nominees.

The vote will represent a choice between Broadcom’s strategy of acquiring companies and focusing on boosting profits, or Qualcomm management’s promise of future growth fueled by investment in new products and technology. "Your proposal is inferior relative to our prospects as an independent company and is significantly below both trading and transaction multiples in our sector," Chairman Paul Jacobs wrote in an open letter to Broadcom’s Tan.