AMERICAN CHIPMAKER Qualcomm has, unsurprisingly, rejected Broadcom's latest buy-out offer following a meeting between the two companies on Valentine's day.
Paul Jacobs, chairman of Qualcomm's board, confirmed that the two companies met on 14 February to discuss their differences.
Qualcomm gave its would-be suitor the opportunity to use the meeting to table a better offer and explain face-to-face why the Qualcomm board should accept it, but Jacobs explained that Broadcom would not budge.
The company initially offered to buy the firm for $70 per share when it made its opening bid in November last year, but Qualcomm described that offer as a gross under-valuation of the company, its technology and its potential. Broadcom then increased its offer to $82 per share.
In a letter last week, Jacobs made it clear that this offer is also not enough and that Broadcom is still undervaluing the firm. "In our February 14 meeting, Broadcom reiterated that $82.00 per share is its best and final proposal," he said
"The board remains unanimously of the view that this proposal materially undervalues Qualcomm and has an unacceptably high level of risk, and therefore is not in the best interests of Qualcomm stockholders."
Broadcom has also agreed to hand over $8bn to Qualcomm if a deal is agreed but blocked by antitrust regulators.
The tech executive said the companies discussed antitrust issues at length. "Our board found the meeting to be constructive in that the Broadcom representatives expressed a willingness to agree to certain potential antitrust-related divestitures," he wrote.
But according to Jacobs, Broadcom's executives tried to avoid some topics regarding regulations. This, he said, caused some concern among Qualcomm's board.
"At the same time, Broadcom continued to resist agreeing to other commitments that could be expected to be required by the FTC, the European Commission, MOFCOM and other government regulatory bodies," he said.
"Broadcom also declined to respond to any questions about its intentions for the future of Qualcomm's licensing business, which makes it very difficult to predict the antitrust-related remedies that might be required."
If Qualcomm did agree to a deal, Broadcom allegedly demanded access to the firm's licensing business straight away - before a deal is even formally concluded. However, as Jacobs writes, this could cause problems for regulators.
"In addition, Broadcom insists on controlling all material decisions regarding our valuable licensing business during the extended period between signing and a potential closing, which would be problematic and not permitted under antitrust laws," he said.
Qualcomm's chairman closed the letter by re-affirming his board's decision but adding that it would be open to future talks.
"Our board is open to further discussions with Broadcom to see if a proposal that appropriately reflects the true value of Qualcomm shares, and ensures an appropriate level of deal certainty, can be obtained," he concluded.
"If such a proposal cannot be obtained from Broadcom, our board is highly confident in Qualcomm's ability to deliver superior near- and long-term value to its stockholders by continuing to execute its growth strategy." µ
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