Today, Qualcomm's Board of Directors unanimously rejected the proposal announced by Broadcom. Qualcomm investors would get a $60 payment and $10 of equity in Broadcom for every share of Qualcomm stock they own. When reports first surfaced about the offer, it was known that Qualcomm wasn't happy with the deal. That's no small amount of money, and it would have ranked as the tech industry's largest acquisition ever.
The proposal "significantly undervalues Qualcomm relative to the company's leadership position in mobile technology and our future growth prospects", said Paul Jacobs, Qualcomm's executive chairman, in a statement.
Shortly after Qualcomm issued its statement on Monday turning down the $70-per-share bid, Broadcomm fired back nearly immediately with an announcement of its own maintaining that its offer was the best the embattled Qualcomm could hope to get. But antitrust authorities already have challenged Qualcomm's business practices in several countries, and the combined companies would hold a dominant position in the wireless industry. Amid all the fighting with Apple, and accompanying loss of revenue, Qualcomm's shares had fallen 20% this year through late October to $51 before rumors of Broadcom's interest leaked. The proposed transaction was valued at approximately $130 billion.
Broadcom's bid may provide motivation for Qualcomm to find a resolution, said Chris Caso, an analyst with Raymond James. The deal could hinge on Qualcomm resolving a conflict with Apple, which has grown over the past year.
Overall, Broadcom's bid is a very ambitious attempt to grow its share of the market for components that go into mobile phones.
Qualcomm CEO Steve Mollenkopf added that the United States chip maker has a future in mobile, the Internet of Things (IoT), edge computing and networking within the semiconductor industry, and the firm has no doubt of future growth in these areas. It thinks it's worth more than the present offer.
This is just a minor hiccup for Broadcom, which is expecting to now escalate a proxy battle by appealing directly to Qualcomm shareholders.