Qualcomm rejects buyout but will meet with Broadcom CEO to discuss $121 billion offer

Mike Freeman, The San Diego Union-Tribune on

Published in Business News

SAN DIEGO -- Qualcomm has rejected Broadcom's latest $121 billion takeover offer but said it is prepared to sit down with Chief Executive Hock Tan to discuss the proposal.

In a letter to Tan on Thursday, Qualcomm Executive Chairman Paul Jacobs said the company's board of directors believes the latest $82 per share offer "materially undervalues Qualcomm and falls well short of the firm regulatory commitment the board would demand given the significant downside risk of a failed transaction."

But Qualcomm's board is prepared to meet with Tan so he can explain how he would attempt to bridge the gaps in value, deal certainty and other issues.

The move is the first time Qualcomm has said it would sit down with Tan after he began pursuing an acquisition of Qualcomm in November.

"I am surprised that Qualcomm opened the door at all – maybe they felt they had no choice at this point," said Steven Re, president of Fairbanks Capital Management, a long-time owner of Qualcomm stock.

"Shareholders should be angry if there is an $82 offer out there and it's totally refused without even letting Hock Tan talk to them," said Re. "The stock is trading at $63. That is a huge spread, and institutional shareholders are not going to take that lightly."

Tan has repeatedly called for Qualcomm's board to open a dialogue, which the San Diego company had refused to do until now.

Tan responded late Thursday that he was willing to meet this weekend and is "astonished" that Qualcomm does not want to sit down until Tuesday. He reiterated that $82 per share is his "best and final" offer and provided a 90 page proposed merger agreement.

"We hope that your willingness to meet with us reflects Qualcomm's genuine intent to reach an agreement with respect to our Feb. 5 proposal," wrote Tan in a letter to Jacobs. "After having met with most of your largest shareholders this past week, we have no doubt that this is their strong desire as well."

Qualcomm's ongoing legal battles with Apple and global antitrust regulators over patent licensing has weighed down its share price for more than a year as other tech company stocks soared.


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