Qualcomm Rejects $130 Billion Broadcom Merger Proposal

13 November, 2017, 16:37 | Author: Leticia Walters
  • Reuters

USA chipmaker Qualcomm is preparing to fend off a bid from rival Broadcom Ltd.to take over the company for about $105 billion.

The rumors of a Qualcomm takeover started a week ago with a huge $103 billion deal from Broadcom, but now Reuters is reporting that Qualcomm's board is planning to reject the offer.

Broadcom said there are "compelling financial benefits" to such a deal and Qualcomm's portfolio and global market reach would be complementary to Broadcom's business.

Mobile chipmaker Qualcomm Inc on Monday rejected rival Broadcom Ltd's US$103-billion takeover bid, saying the offer "dramatically" undervalued the USA company.

Broadcom made the offer just days after its CEO visited the White House to tout the company's plans to move its operations to the U.S. Apparently, it is considering raising its bid, but also wants to submit its own selection of directors for Qualcomm's board.

Meanwhile, Broadcom's shares have surged almost 50 percent in the past 12 months as it completed the Broadcom/Avago Technologies acquisition, paid down debt and increased revenue and profitability.

Qualcomm's shares have been weighed down by its nasty legal battle with Apple over patent royalties, fines from antitrust regulators and slow progress on its planned $38 billion acquisition of NXP Semiconductors.

NXP shares have been trading above Qualcomm's offer price, as many NXP shareholders, including hedge fund Elliott Management Corp, have been holding out for a better price. The shares ended last week little changed this year at $64.57.

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