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Qualcomm rejects Broadcom's new offer

Qualcomm rejects Broadcom's revised offer early February 2018
Qualcomm building
Back in November, Qualcomm's Board of Directors rejected Broadcom's US$105 billion acquisition offer. Now, even after an increase to US$121 billion, the negative answer of the board remains unanimous.

Broadcom seems to be really interested in taking over Qualcomm these days, although they are now facing the second unanimous rejection from the board of the San Diego-based chipmaker. We now have to see if they can live with the defeat or Broadcom still has Qualcomm-related plans to carry out. After all, they said that the new proposal included its best and final offer and it would be natural for them to let it go now that this offer has been rejected.

Back in November, Broadcom came up with an unsolicited proposal to acquire all of the outstanding shares of Qualcomm for US$70 per share, the total amount offered reaching US$105 billion. Qualcomm's board unanimously rejected that offer, so Broadcom decided to increase it. On February 5, they made a new offer, rising the amount offered to US$121 billion (US$82 per share). 

This is the essential part of Qualcomm's press release that was published yesterday: "The Qualcomm Board, assisted by its financial and legal advisors, determined that the Broadcom proposal 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.  However, Qualcomm has offered to meet with Broadcom to see if it can address the serious deficiencies in value and certainty in its proposal."

Since Qualcomm has just invited Broadcom to a meeting, this deal might be concluded after all. However, Broadcom must give a good reply to the following question of Qualcomm's board: "Is Broadcom willing to commit to take whatever actions are necessary to ensure the proposed transaction closes?"

These being said, Broadcom's "best and final offer" might turn out to be anything but final. However, Qualcomm is doing great these days and the best deal for them would be to leave everything as it is. What do you think - does Qualcomm need this deal, or are they better off without Broadcom? Don't be shy and drop your comments below!

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Codrut Nistor, 2018-02- 9 (Update: 2018-02- 9)