Qualcomm Could Reject $103 billion Broadcom Bid


 
 
03:08 11/13/2017

The acquisition excitement may be short lived on speculation Qualcomm Inc QCOM  may be preparing to reject competitor Broadcom Ltd's AVGO  $103 billion bid as early as this week , setting the stage for one of the biggest-ever takeover battles.

Qualcomm's board of directors could meet as early as Sunday to review the unsolicited acquisition offer and decide on its strategy. The preparations for the board meeting indicate that Qualcomm is poised to reject the bid as insufficient this week.

Qualcomm Chief Executive Steven Mollenkopf has spent the past few days soliciting feedback from Qualcomm shareholders, and feels that Qualcomm's $70-per-share bid undervalues the company and does not price in the uncertainty associated with getting the deal approved by regulators.

Broadcom CEO Hock Tan, who said earlier this month he would redomicile his company to the United States from Singapore, has stated he is open to launching a takeover battle. Broadcom has also been deliberating the possibility of raising its bid for Qualcomm, including through more debt financing, some of the sources said, although it was not clear when Broadcom would choose to make such a move.

The Reuters sources asked not to be identified because the deliberations are confidential. Qualcomm and Broadcom did not immediately respond to requests for comment.

Qualcomm provides chips to carrier networks to deliver broadband and mobile data. It is engaged in a patent infringement dispute with Apple Inc , .AAPL  and is also trying to close its $38 billion acquisition of automotive chipmaker NXP Semiconductors NV NXPI  after signing a deal in October 2016. Broadcom has indicated it is willing to acquire Qualcomm irrespective of whether it closes the NXP deal.

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. Qualcomm does not plan to significantly raise its price for NXP as a defensive strategy to make its acquisition by Broadcom more expensive, according to one of the sources.

Qualcomm shares closed at $64.57 on Friday, while Broadcom ended at $264.96.


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