Qualcomm rejects Broadcom’s raised offer, extends timeline for NXP
Qualcomm’s initial offer for the acquisition of NXP was noticeably undervalued, even more so now since NXP’s shares have consistently increased over the last year.
The irony is that a day prior to extending its offer to NXP, Qualcomm’s Board of Directors wrote a letter to Broadcom’s President and CEO Hock Tan to unanimously reject the revised Broadcom proposal, arguing that at $82.00 per share ($60.00 in cash and $22.00 in Broadcom stock), it feels undervalued by the company.
However, Qualcomm’s rejection may not be final. “Exploring all options for maximizing shareholder value”, the Board of Directors would be prepared to meet with Broadcom’s CEO, it writes in the letter, expecting Broadcom’s explanations on how the company could possibly bridge the gaps Qualcomm sees, both in value and deal certainty.
As well as depreciating the $82 per share offer, the letter also refers to the potential acquisition of NXP, which it says was not duly taken into consideration in this hostile bidding.
“Your proposal ascribes no value to our accretive NXP acquisition, no value for the expected resolution of our current licensing disputes and no value for the significant opportunity in 5G. Your proposal is inferior relative to our prospects as an independent company and is significantly below both trading and transaction multiples in our sector” reads the letter.
In its letter, Qualcomm’s Board also questions the safeguards Broadcom would put into place to ensure minimal risk exposure in case the proposed transaction failed. Yet, on the very same day on Broadcom’s website, one could read the company’s proposal was best and final, claiming it had received strong Qualcomm stockholder support for its $82 per share offer.
Will the two companies ever meet? Considering the substantial fines and disputes Qualcomm is facing on multiple front, shouldn’t the company just take the money and run?