Qualcomm’s board of directors unanimously rejected Broadcom’s final takeover bid of $82 per share, but offered to meet with the company to address lingering questions around the proposal.
In a letter to Broadcom CEO Hock Tan, Qualcomm board chairman Paul Jacobs said the board concluded the latest offer still “materially undervalues Qualcomm,” and “ascribes no value” to the company’s NXP acquisition. He added the proposal “falls well short of the firm regulatory commitment” Qualcomm would want from a transaction with such a high risk of failing to receive needed approvals from regulators.
However, Jacobs’ letter wasn’t a hard rejection. He noted Qualcomm’s board is “prepared to meet” with Tan to hash out their different expectations: “We have a number of other important questions, which we can discuss at our meeting. We will reach out to you to schedule the meeting.”
In particular, Jacobs said Tan should be prepared to share the “true highest price” Broadcom is willing to pay for Qualcomm and whether Broadcom is willing to “take whatever actions are necessary to ensure the proposed transaction closes”.
The latter questions appear to be of particular concern to Qualcomm. Jacobs explained it would face “significant customer and licensee risk” between signing a deal and the transaction’s close, and would be “enormously and irreparably damaged” if the acquisition failed to go through. The chairman added Tan’s answers on what steps Broadcom is willing to take to ensure success will help Qualcomm’s board better evaluate a deal’s risk for shareholders.