Largest ever tech takeover 'significantly undervalues' chipmaker
(It could also make both moves, of course, targeting shareholders with better terms than the first proposal held.) Or, as Barron's pointed out, Broadcom could make more hostile moves, such as trying to nominate allies to Qualcomm's board.
The rebuff ratchets up pressure on Broadcom to sweeten its offer or embark on a proxy battle, which carries its own risk of rejection by shareholders. Broadcom responded "it remains fully committed to pursuing its acquisition of Qualcomm Incorporated".
Qualcomm rejected an unsolicited, $103 billion offer from Broadcom, saying that the proposal is significantly undervalued and that a tie-up between the massive chipmakers would face substantial regulatory resistance.
"We are confident in our ability to create significant additional value for our stockholders as we continue our growth in these attractive segments and lead the transition to 5G", he added. Today's Broadcom is the product of a $37 billion combination in 2016 between Avago, a Singapore-based company that was once part of a former unit of pioneering PC maker Hewlett-Packard, and Broadcom, another company with origins in Southern California which made chips for tablets, smartphones and other telecom and cable applications. In fact, if the deal goes ahead it would probably the biggest in the technology industry's history, worth more than Dell's purchase of EMC in 2015, which was valued at $67 billion.
"Qualcomm shareholders are likely to hold out for more, but we believe something in the US$80-ish range is likely enough to bring majority around", Sanford C. Bernstein analyst Stacy Rasgon wrote in a note published at the weekend.
Broadcom said it would seek to engage with Qualcomm's board and management.
Tan, who has built Broadcom through a series of transactions that have helped reshape the US$300 billion semiconductor industry, has previously been able to pull off deals with friendly approaches.
"Many have expressed to us their desire that Qualcomm meet with us to discuss our proposal", he added.
And CEO Steve Mollenkopf said that Qualcomm well positioned for continual growth. "We are highly confident that the strategy Steve and his team are executing on provides far superior value to Qualcomm shareholders than the proposed offer", said Tom Horton, presiding director for Qualcomm.