Qualcomm’s board remains unpersuaded by chipmaker Broadcom’s $121 billion acquisition offer; however Qualcomm said it found the February 14 meeting “constructive” and is open to further talks.
The Qualcomm board believes the offer undervalues the company and “has an unacceptably high level of risk,” Board Chairman Paul Jacobs said in a Friday letter to Broadcom President/CEO Brock Tan. He noted that Broadcom said that was its best and final offer.
Jacobs noted that Broadcom representatives “expressed a willingness to agree to certain potential antitrust-related divestitures beyond those contained in your publicly filed merger agreement.” However, Broadcom resisted agreeing to other commitments that could be expected to be required by the FTC, the European Commission and other government regulators. That, said, Jacobs, “makes it very difficult to predict the antitrust-related remedies that might be required.”
The Qualcomm board was also not happy that Broadcom “insists on controlling” decisions about Qualcomm’s licensing business between when a deal would be signed and closed, which would be “problematic and not permitted under antitrust laws.”
The board is open to further discussions with Broadcom to see “if a proposal that appropriately reflects the true value of Qualcomm shares, and ensures an appropriate level of deal certainty,” can be obtained, wrote Jacobs. He also indicated the Qualcomm board is open to other avenues of maximizing shareholder value, whether through executing on its growth strategy or by selling the company.
The decision may not be up to the Qualcomm board however. Shareholders are slated to vote on several Broadcom board nominees on March 6, giving investors a chance to effectively approve the deal.
February 19, 2018
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