US semiconductor company Qualcomm Inc on Thursday rejected Broadcom Ltd's revised $121 billion (86.81 billion pounds) buyout offer, but proposed meeting its peer to see whether they can address what it called the bid's "serious deficiencies in value and certainty". It is indisputable that there are significant regulatory hurdles in your proposed transaction. The deal would take the form of $60 in cash and the remainder in Broadcom shares, a bump of 17 percent from its opening offer in November of $70 a share, which Qualcomm also rejected.
But it's offered to meet with Broadcom to see if it can work out their differences.
"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 Tan. Boards of public companies have a fiduciary duty to consider shareholders, so Qualcomm needed to justify why it was turning this down.
Qualcomm says Broadcom's revised takeover offer is inadequate.
Buying Qualcomm would make Broadcom the third-largest chip maker, behind Intel Corp. and Samsung Electronics Co.
Photo A successful acquisition of Qualcomm would be the technology industry's biggest-ever takeover, creating a tech giant whose products would be used in almost all of the world's smartphones. Qualcomm's collection of patents is one of the most valuable assets in the world of wireless telecommunications.
The deal would be the largest-ever technology acquisition to date, eclipsing Dell's acquisition of EMC for about $65 billion.
Qualcomm added that the regulatory approval process could take longer than 18 months and disrupt Qualcomm during a period of explosive innovation in the industry that includes the development of 5G mobile phones, autonomous driving and the expanding use of computerized gadgets from refrigerators to thermostats.
Qualcomm contends that overlap in Wi-Fi, Bluetooth and other product lines, as well as customer concerns, could result in a lengthy review by global regulators, who might require selling off divisions or block the deal outright.