Qualcomm Rejects Broadcom's Unsolicited $120 Billion Offer, Holds Out For More Cash

Semiconductor

Broadcom may beg to differ, arguing in its most recent bid that any takeover would be completed within a year and offering compensation if deadlines were missed.

But the question of when still remains.

Broadcom is waving a hell of a lot of benjamins in front of Qualcomm's face, with a huge $121 billion offer thrown onto the table last week, and once again Qualcomm has rejected the offer.

Broadcom had said earlier that its revised offer was contingent on either Qualcomm buying NXP at now disclosed terms of US$110 per share in cash or the US$38 billion deal being terminated. On the contrary, Broadcom's CEO, Tan, said that it is surprising that Qualcomm is not prepared to meet until Tuesday and confirmed that Broadcom's proposal incorporates an $8 billion regulatory reverse termination remuneration.

Broadcom's "best and final" offer for Qualcomm comes with conditions related to the NXP acquisition. Qualcomm announced the news in a press release yesterday, stating that its board of directors had "unanimously" rejected the unsolicited proposal. In a presentation on its website, Broadcom criticized the performance of Qualcomm's management, saying Qualcomm's "business model has been broken for a long time" and that the company's stock has significantly underperformed peers.


Broadcom's bid for the larger company is Mr Tan's most audacious move following a string of deals that have already made his company one of the world's largest suppliers of semiconductors.

Regulation issues aside, this deal is far from straightforward. Another hold-up comes in the form of activist NXP shareholders resistant for the deal and are asking for a higher price.

Furthermore, Qualcomm's acquisition of NXP that would give the former an opening to other markets, is still in process.

The board had determined that Broadcom's proposal "materially undervalues" Qualcomm and fell short of the firm regulatory commitment the deal would demand, given the significant downside risk of a failed transaction, the company said. The deal would have $60 in cash and remainder of its shares. Investors contacted by Bloomberg at the time of the initial bid said they would need more than $80 a share to be persuaded to side with Broadcom.

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