Qualcomm Rejects Broadcom's Offer, Says Open to More Talks

Qualcomm Rejects Broadcom's Offer, Says Open to More Talks
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Qualcomm’s board said discussions with Broadcom failed to persuade the chipmaker to sign off on a $121 billion takeover offer, making it more likely shareholders will get to decide on the fate of the deal, according to Bloomberg.

At the same time, Qualcomm said it found the meeting to be “constructive,“ and that it would be open to further discussions. “The board remains unanimously of the view that this proposal materially undervalues Qualcomm and has an unacceptably high level of risk, and therefore is not in the best interests of Qualcomm stockholders,“ Qualcomm said in a letter to Broadcom.

Qualcomm shareholders are scheduled to vote on a slate of Broadcom’s nominees to the board at a meeting on March 6, giving investors the chance to effectively approve the proposal. If elected, the new directors would be able to override the current board’s opposition to the latest, sweetened offer of $82 a share. Aside from the offer price, Qualcomm’s reservations hinged around antitrust issues.

While the board was pleased that Broadcom seemed willing to divest assets beyond what it had initially proposed to avoid competition issues, Qualcomm complained that Broadcom continued to resist agreeing to other commitments that could be expected from regulatory agencies. Broadcom also declined to answer questions about the future of Qualcomm’s licensing business, making it difficult to know what antitrust measures might be required.

Qualcomm also dismissed the Broadcom’s offer of an $8 billion break-up fee if the deal fails. The payment, "does not come close" to compensating shareholders for the risk of a botched deal, Qualcomm said. “Qualcomm’s board is open to further discussions with Broadcom to see if a proposal that appropriately reflects the true value of Qualcomm shares, and ensures an appropriate level of deal certainty, can be obtained,“ the company said.