Qualcomm Board Unanimously Rejects Broadcom's Blockbuster $130 Billion Takeover Bid

14 November, 2017, 00:40 | Author: Becky Perry

Inside sources claim that Qualcomms board of directors will reject Broadcoms offer to acquire the Snapdragon chip designer.

"It is the board's unanimous belief that Broadcom's proposal significantly undervalues Qualcomm relative to the Company's leadership position in mobile technology and our future growth prospects", executive chairman Paul Jacobs said in a release.

Broadcom "remains fully committed" to the acquisition and said in its own statement that combining the two companies would create "a strong, global company with an impressive portfolio of industry-leading technologies and products".

On a more positive note, Canaccord Genuity's Mike Walkley, reiterating a Buy rating on Qualcomm, raises his price target to $83 from $76, writing that he thinks Broadcom will bid higher.

That was a not-so-veiled threat to pursue a hostile takeover if necessary.

"Our proposal provides Qualcomm stockholders with a substantial and immediate premium in cash for their shares, as well as the opportunity to participate in the upside potential of the combined company", said Hock Tan, President and Chief Executive Officer of Broadcom at the time. Qualcomm wants to power and connect every future device, an ambition it's not confident it could achieve while operating as a joint venture with Broadcom.

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"Our math suggests Broadcom has a significant amount of room to play with", Bernstein analyst Stacy Rasgon wrote on Monday.

Canaccord Genuity analyst Mike Walkley wrote, "We believe Broadcom is likely to increase its bid".

Last week, Broadcom announced its intent to purchase massive mobile chip maker Qualcomm.

The takeover bid came during a bad year for Qualcomm, which has been locked in battle with Apple. Qualcomms stock closed at $64.57 a share on Friday, however the board of directors believes Broadcoms offer undervalues their company.

On Monday, Qualcomm's (qcom) shares were up to nearly $66, though still below the $70 bid.

Overall, Broadcom's bid is a very ambitious attempt to grow its share of the market for components that go into mobile phones.

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