Qualcomm’s board formally rejected Broadcom’s $105 billion takeover bid Monday, arguing that it “significantly undervalues” its business. The deal was already a long shot, facing an obstacle course of antitrust regulators.
The company said that its board voted unanimously to reject the $70 per share bid, which would have created a dominant chip supplier for cars, smartphones, and basically any product connected to the internet. In a recent statement, Broadcom downplayed the potential threat of antitrust regulators, which have financially and legally battered Qualcomm for months.
Last week, Bloomberg reported that Broadcom would resort to a hostile takeover if Qualcomm turned down the deal, which faced lots of skepticism throughout the semiconductor industry. That would mean offering to buy stock from shareholders directly, circumventing management.
The $105 billion bid pitted the ambitions of Broadcom’s chief executive Hock Tan – famed as the most voracious dealmaker in the chip industry – against those of Qualcomm’s chief executive Steve Mollenkopf – a former chip designer that rose through the ranks of the company he wagers can move its chips into sensors, personal computers, and data centers.
“No company is better positioned in mobile, IoT, automotive, edge computing and networking within the semiconductor industry,” Mollenkopf said in a statement on Monday. “We are confident in our ability to create significant additional value for our stockholders as we continue our growth in these attractive segments and lead the transition to 5G."
Qualcomm already seemed likely to rebuff the deal. The chipmaker’s stock price had hovered around $69 before a series of regulatory repercussions to its licensing business starting last year opened the door to bitter legal battles with Apple. Qualcomm’s troubles extend to its $47 billion deal for NXP, one of the largest makers of secure microcontrollers for everything from sensors to cars.
The San Diego, California-based company has struggled to close the deal, which has stalled in the hands of regulators for months. It could take several more months to convince NXP shareholders, who have grumbled that the $47 billion offer price should be higher. Qualcomm’s stock price was around $55 before details of Broadcom’s bid leaked earlier this month.
“We continue to believe our proposal represents the most attractive, value-enhancing alternative available to Qualcomm stockholders and we are encouraged by their reaction,” Tan said in a statement on Monday. “Many have expressed to us their desire that Qualcomm meet with us to discuss our proposal."
"It remains our strong preference to engage cooperatively with Qualcomm's Board of Directors and management team,” he added.