CHIPMAKER Qualcomm has surprised precisely no one by rejecting Broadcom's "best and final" offer to take over the company.
Broadcom this week upped its offer from $70 per share to $82 per share after its earlier bids for Qualcomm were snubbed by the chipmaker, who claims they had "undervalued" the company.
Qualcomm said on Thursday that it has "unanimously" rejected Broadcom's revised bid, again arguing that the offer "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."
In a letter to Broadcom CEO Hock Tan on Thursday, Qualcomm chairman Paul Jacobs addressed concerns about a deal falling through.
"It is indisputable that there are significant regulatory hurdles in your proposed transaction. It is also indisputable that if Qualcomm entered into a merger agreement and, after an extended regulatory review period the transaction did not close, Qualcomm would be enormously and irreparably damaged," Jacobs said.
"If you are not willing to agree to do whatever is necessary to ensure a transaction closes, we will need you to be extremely clear and specific about exactly what actions you would refuse to take, so that we can properly evaluate the risk to Qualcomm's shareholders."
Jacobs went on to discuss, yet again, how Broadcom's offers have undervalued the firm. He argued that the rival chipmaker has failed to take into account the firm's NXP acquisition, nor the potential of the firm's 5G technology.
"Your current proposal is inadequate as it materially undervalues Qualcomm. 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," he said.
"Your proposal is inferior relative to our prospects as an independent company and is significantly below both trading and transaction multiples in our sector."
However, Qualcomm has offered to meet with Broadcom to see if it can address the serious deficiencies in value and certainty in its proposal. µ
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