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Qualcomm Rejects Broadcom's Bid, Proposes Meeting to Discuss Deficiencies

Qualcomm Inc.’s (QCOM) board has unanimously rejected Broadcom Ltd.’s (AVGO) “best and final” revised $121 billion buyout offer, but agreed to meet with its rival to discuss the bid’s “deficiencies” after facing pressure from some of its shareholders to do so.

In a statement, the San Jose, California-based chipmaker said Broadcom’s latest offer of $82 per share “materially undervalues” Qualcomm and “falls well short of the firm regulatory commitment” required to gain regulatory clearance for such a transaction.

“Your proposal is inferior relative to our prospects as an independent company and is significantly below both trading and transaction multiples in our sector,” Chairman Paul Jacobs wrote in an open letter to Broadcom’s CEO Tan. “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.”  

Broadcom responded to Jacob’s letter by reiterating that its latest bid of $60 in cash and the rest in Broadcom shares is its “best and final” offer. The Irvine, California-based company’s CEO Hock Tan added that the bid also took into account Qualcomm’s antitrust concerns by including an $8 billion regulatory reverse termination fee. Tan is now trying to set up a meeting to discuss the offer in person. (See also: Broadcom to Raise Its Qualcomm Offer to $120B: Reports.)

Qualcomm is open to meeting with Broadcom and has reportedly put together a list of the issues that it believes need addressing in preparation for it. Tan was hoping to meet with Qualcomm’s board over the weekend and said he was “astonished” that the company wasn’t willing to meet until Tuesday.

Qualcomm’s willingness to meet with Broadcom on Tuesday is believed to be influenced by some of its shareholders, who have been urging the company to engage with its rival in the hope of clinching an attractive deal. The San Jose, California-based chipmaker is mindful that shareholders are set to vote March 6 on who to elect to its board. There’s still a chance that they could vote to install Qualcomm’s management team. (See also: Qualcomm’s Stock Heads to a Crossroads.)

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