Qualcomm rejects Broadcom's $100 billion-plus takeover bid

Steven Mollenkopf CEO of Qualcomm

Another tactic Broadcom could use is to nominate directors for Qualcomm's board ahead of the company's annual general meeting in 2018.

"It is the board's unanimous belief that Broadcom's proposal significantly undervalues Qualcomm relative to the company's leadership position in mobile technology and our future growth prospects", said Paul Jacobs, Executive chairman and chairman of the Qualcomm board.

Broadcom presented a US$130 bn offer for Qualcomm, its adversary chip producer.

But Qualcomm Chief Financial Officer Steve Mollenkopf said that Qualcomm is in a competitive position where it doesn't need to jump at an offer, even one as large as Broadcom's. Apparently, it is considering raising its bid, but also wants to submit its own selection of directors for Qualcomm's board.

That was a not-so-veiled threat to pursue a hostile takeover if necessary.

USA chipmaker Qualcomm Inc (QCOM.O) is making preparations to reject rival Broadcom Ltd's (AVGO.O) $103 billion bid as early as this week, four people familiar with the matter said on Sunday, setting the stage for one of the biggest-ever takeover battles. But, now Qualcomm officially rejects that offer of 103 Billion dollars. Both companies count Apple among their top customers. Tan has suggested he would quickly settle.

Canaccord Genuity analyst Mike Walkley wrote, "We believe Broadcom is likely to increase its bid".

Just last week, Broadcom issued a note to investors in which they announced a "proposal to acquire all of the outstanding shares of" Qualcomm "for per share consideration of $70.00 in cash and stock". Analysts have said a deal between the two would help Qualcomm settle its legal battle with the iPhone maker as Broadcom has a closer relationship with Apple.

The takeover bid came during a bad year for Qualcomm, which has been locked in battle with Apple.

On Monday, Qualcomm's (qcom) shares were up to nearly $66, though still below the $70 bid. If Broadcom makes a hostile bid, Qualcomm's governance rules would allow the rival to submit its own slate for the entire 11-member board by the December 8 nomination deadline.

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