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Why Qualcomm Turned Down Broadcom's $121 Billion Offer—And What Comes Next

Broadcom Chief Executive Officer Hock Tan urged Qualcomm (qcom) to meet this weekend to discuss the $82 a share offer and dangled the prospect of an $8 billion reverse termination fee in a letter to Paul Jacobs, chairman of the board.

The offer “materially undervalues” Qualcomm and “falls well short of the firm regulatory commitment” needed to gain approval for such a transaction, the San Diego-based company said Thursday in a statement.

The vote will represent a choice between Broadcom’s strategy, under Tan, of acquiring companies and focusing on boosting profits, or Qualcomm management’s promise of future growth fueled by investment in new products and technology.

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

Qualcomm’s contention that the chipmaker’s future is brighter as a standalone company has become a tougher sell, given the multiple challenges that have cropped up in the past two years.

Once that happens, Qualcomm will need to negotiate with a group of funds that have taken a position in the Dutch company’s stock, demanding a boost to the $110-a-share price agreed to by NXP’s board.

“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,” Qualcomm’s Jacobs wrote.

READ MORE (Fortune)

  • Qualcomm warns of customer losses, legal hazards to Broadcom buyoutReuters
  • Qualcomm Rejects Broadcom's `Best and Final' $121 Billion BidBloomberg
  • 10 things you need to know before the opening bellBusiness Insider
  • Qualcomm Rejects Broadcom's Bid, Proposes Meeting to Discuss DeficienciesInvestopedia (blog)
  • Sorry, Broadcom: Qualcomm Isn't Giving In On Your $121 Billion Acquisition OfferTech Times
  • Qualcomm turns down Broadcom's revised bid againGizbot
  • Qualcomm rejects Broadcom's $121 billion bidTechCrunch
  • Qualcomm rejects Broadcom's revised buyout offer, proposes meetingYahoo Finance
  • Qualcomm rejects Broadcom hostile bid, opens door to talksPhys.Org

This post first appeared on The 5th News, please read the originial post: here

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Why Qualcomm Turned Down Broadcom's $121 Billion Offer—And What Comes Next


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