Qualcomm turns down Broadcom's revised bid again

Qualcomm today announced its Board of Directors has unanimously rejected the revised non-binding, unsolicited proposal by Broadcom to acquire all outstanding shares of Qualcomm for $82.00 per share. According to the California-based chipset maker, Broadcom's proposal materially undervalues the company and falls well short of the firm regulatory commitment.

However, Qualcomm has offered to meet with Broadcom to see if it can address the serious deficiencies in value and certainty in its proposal. The company wants to discuss "the significant issues that remain unaddressed", wrote Qualcomm's chairman Paul Jacobs in a letter to Broadcom's chief executive Hock Tan.

"However, the board is committed to exploring all options for maximizing shareholder value, and so we would be prepared to meet with you to allow you to explain how you would attempt to bridge these gaps," noted the letter.

This move comes only three days after Broadcom increased its offer to $82 (approximately Rs. 5,280) per share to create a monopoly in the chip-making sector. If Qualcomm had accepted Broadcom's offer, it would have been the biggest deal in the tech industry; worth around $146 billion (approximately Rs. 9.39 lakh crores) including assumed debt.

Jacobs was quick to point out that the offer "raises more questions than it answers" and it fails to address the planned takeover by Qualcomm of the Dutch manufacturer NXP.

"What is the true highest price at which you would be prepared to acquire Qualcomm? Is it $82 per share or is it higher?" Jacobs asked in the letter.

The letter also added that the bid "ascribes no value" to NXP or to Qualcomm's plans to roll out new devices with the fifth generation of wireless networks aka 5G.

"Your proposal is inferior relative to our prospects as an independent company and is significantly below both trading and transaction multiples in our sector," wrote the Qualcomm chairman.

Broadcom has been trying to acquire Qualcomm since November last year. Unfortunately, its previous offers were also rejected. Now, it will be interesting to see if the company finally gets to buy the leading chip maker any time soon.

However, for the deal to happen, just a nod from Qualcomm is not enough. There are still many factors that would play a part in this. Regulatory authorities would have to approve it as well as the stockholders of both firms.