Qualcomm Spurns Broadcom's $121 Billion Marriage Proposal

Qualcomm rejects $121 bn hostile Broadcom bid again

SEC FORM 4 - SEC.gov

It comes after Broadcom upped its offer for Qualcomm from $70 per share to a "best and final" $82 per share - an increase in bid from $130 billion to $145 billion, after factoring in net debt, but with the difference made up from an increase in the Broadcom shares component of the offer, rather than more cash.

That price, which values Qualcomm at $121 billion, is still too low for Qualcomm's board, which rejected it.

From a February 16 letter to Broadcom CEO Hock Tan from Qualcomm's Chairman Paul Jacobs: "While the current Broadcom proposal is unacceptable, our board is intensely focused on maximizing value for Qualcomm stockholders, whether through executing on its growth strategy or by selling the Company". Broadcom has promised to pay a breakup fee of $8 billion in the event regulators thwart the deal, as well as a "ticking" fee of 6 percent per year on the cash portion of the consideration if the deal takes more than 12 months to close.

Broadcom has yet to respond. Jacobs does say in the letter that the Board is "highly confident in Qualcomm's ability to deliver a superior near- and long-term value to its stockholders" if an agreement can't be reached, but the sheer fact that Qualcomm isn't completely turning Broadcom down leaves me anxious that something could still happen between the two. But Tan has said $82 per share is his best and final offer.

Broadcom this week modified its proposal for a slate of Qualcomm board members, calling for six new members - who would presumably look favourably on the hostile bid - instead of an entirely new board of 11 members.

Jacobs said the latest offer "has an unacceptably high level of risk", and noted that Broadcom had failed to allay concerns about whether the deal could get approval from antitrust authorities in the United States, Europe and elsewhere.

Still, the company called the meeting constructive and is willing to talk further. However, Qualcomm did encourage further discussions.

Qualcomm's shares dipped slightly to $64.98 in early trading Friday on the Nasdaq exchange.

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