AMERICAN CHIPMAKER Qualcomm has said it's open to holding more talks with Broadcom after rejecting the firm's Valentine's day proposal.
The offer was extended in an open letter from Qualcomm's chairman of the board, Paul Jacobs, to Broadcom CEO Hock Tan.
Jacobs described the two companies' last meeting as "productive" and claimed that the firms made "further progress toward a possible negotiated transaction on key issues other than price".
But during the meeting, the Qualcomm board also made it clear that it would not consider approving the proposal as it "materially undervalues" the firm, especially after Broadcom last week slashed its offer after Qualcomm increased its own offer for NXP Semiconductors.
"As we are all aware, a combination of Broadcom and Qualcomm would represent the largest technology transaction in history and one of the largest M&A transactions overall," wrote Jacobs.
"This represents uncharted territory and our Board and management are taking great care to incorporate an appropriate level of protections for Qualcomm stockholders in a potential transaction with Broadcom."
Jacobs not only criticised Broadcom's revised $79 per share deal, but also reiterated that $82 per share is also not enough to secure the Qualcomm board's approval.
"While we have made progress on regulatory and other deal certainty issues, you have continued to insist that your current $79.00 per share proposal is your best and final proposal," he said.
"For the reasons we have stated publicly to our stockholders, and privately to you in our meetings, the Qualcomm board continues to be of the unanimous belief that each of your proposals, including your prior $82 per share proposal, materially undervalues Qualcomm."
He said the company's board is still worried about the uncertainty that a deal would bring.
"As you know, the current challenges we are facing in our licensing business have masked continued strong performance and market leadership in our semiconductor business," said Jacobs.
"While we recognise that Qualcomm's business is unique, we believe the plan we are executing to overcome our current challenges capitalises on the many value drivers we have put in place and will position us to drive strong returns for our shareholders."
In the second meeting, Jacobs confirmed that the two firms discussed regulatory risk at length.
"We asked Broadcom to agree to any conduct remedies and other remedies that may be imposed by regulators that would not have a material adverse effect on the combined company," he added.
"We proposed a reverse termination fee of nine per cent of enterprise value, payable if a potential transaction is terminated other than due to a breach of the agreement by Qualcomm or our failure to obtain stockholder approval."
Jacobs believes that these commitments from Broadcom would "provide acceptable risk protection" to its stockholders. µ
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