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Qualcomm rejects Broadcom’s ‘final’ acquisition offer

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Qualcomm’s board has unanimously rejected a supposedly final offer by smaller rival Broadcom to acquire the company, which if Broadcom chief Hock Tan’s statement is to be believed spells the end of the takeover attempt – but a request for a meeting may test Tan’s resolve.

Hock Tan’s Qualcomm expressed an interest in acquiring Qualcomm, a rival some two times its size, back in November 2017 with an unsolicited offer quickly rejected by Qualcomm as undervaluing the company. Not taking an outright ‘no’ for an answer, Tan quickly switched to a hostile takeover attempt which was publicly derided by Qualcomm and reportedly caused Microsoft no little heartache.

Earlier this week Tan issued what was claimed to be a ‘best and final offer‘ for Qualcomm, at $82 per share compared to the originally offered $72 per share. If Qualcomm didn’t accept by the company’s annual meeting, and if his attempt at installing a board which would be more amenable to the deal failed, Tan claimed that his company would ‘withdraw this proposal and cease our pursuit of Qualcomm‘ – something Tan would appear certain to be facing following an announcement from Qualcomm rejecting the revised offer.

This time around, though, it’s not a firm ‘no’: Qualcomm has stated that while the ‘final’ offer ‘materially undervalues Qualcomm and falls well short of the firm regulatory commitment the Board would demand given the significant downside risk of a failed transaction,‘ the company has offered to meet with Tan and his representatives to discuss revising the deal to ‘address the serious deficiencies in value and certainty in its proposal‘ – a significantly warmer response than Broadcom received for its original offer.

The Board is committed to exploring all options for maximising shareholder value, and so we would be prepared to meet with you to allow you to explain how you would attempt to bridge these gaps in both value and deal certainty and to better understand the significant issues that remain unaddressed in your proposal,‘ Qualcomm chair Paul E. Jacobs explains in an open letter to Tan. Two key points are then raised: Whether there’s any room for raising the $82 per share ‘final’ offer, and whether Broadcom is willing to put up whatever commitments would be required to guarantee the closure of the transaction without any regulatory or other issues torpedoing it at the last minute. ‘We have a number of other important questions,‘ adds Jacobs, ‘which we can discuss at our meeting.

Thus far, Broadcom has not publicly responded to Qualcomm’s offer.

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