- Qualcomm (NASDAQ:QCOM) officially rebuffed Broadcom (NASDAQ:AVGO)'s acquisition offer, which would be the biggest-ever deal in the tech industry.
- The company says it's worth more than Broadcom's $70 per share offer.
- This is just a minor hiccup for Broadcom, which is expecting to now escalate a proxy battle by appealing directly to Qualcomm shareholders.
Qualcomm rejected Broadcom's $105 billion acquisition offer on Monday, but the battle has just begun.
The company's decision to decline what would be the biggest-ever tech deal simply postpones the inevitable proxy battle that will ultimately decide the fate of the chipmaker.
Qualcomm's reason for saying no? It thinks it's worth more than the present offer.
"It is the board’s unanimous belief that Broadcom’s proposal significantly undervalues Qualcomm relative to the Company’s leadership position in mobile technology and our future growth prospects," executive chairman Paul Jacobs said in a release.
The original approach came on November 6, when Broadcom offered $70 per share for Qualcomm. Even before the deal was rebuffed on Monday, Broadcom had been preparing for a proxy battle during which it would appeal directly to Qualcomm shareholders, according to a Bloomberg News report. Another tactic Broadcom could use is to nominate directors for Qualcomm’s board ahead of the company’s annual general meeting in 2018.
Overall, Broadcom's bid is a very ambitious attempt to grow its share of the market for components that go into mobile phones. It's also a timely bid Qualcomm, whose earnings this year have been hurt by a global legal fight with Apple (NASDAQ:AAPL) over its licensing fees for patents. The combined company would be third-largest chipmaker behind Intel (NASDAQ:INTC) and Samsung (KS:005930).
Qualcomm's stock climbed 1.2% in premarket trading, while Broadcom declined 0.6%.