Qualcomm and Broadcom to meet on Valentine's Day to talk marriage

Qualcomm and Broadcom to meet on Valentine's Day to talk marriage
Qualcomm has told Broadcom that it has rejected its "best and final offer" of $121 billion because of several factors. One is valuation. Qualcomm believes that it is worth more than a cash and stock bid of $82 a share. In addition, Qualcomm has stated that if a deal is agreed to and government regulators refuse to clear it, the company will be "enormously and irreparably damaged." As a result, the company wants to have a break-up fee in place that is higher than the usual 3%-4% of the transaction's value. Broadcom has reportedly agreed to an $8 billion fee, which is 6% of the deal's value.

As far as valuation is concerned, Qualcomm Chairman Paul Jacobs, in a letter to Broadcom CEO Hock Tan, suggested that both sides sit down to discuss the pricing of the transaction. Jacobs believes that Broadcom's offer of $60 in cash and $22 in Broadcom stock, doesn't reflect Qualcomm's potential $38 billion acquisition of NXP Technologies. An approval from Chinese regulators is all that is needed to start the process of closing that transaction. And now, both sides have agreed to move this battle to the bargaining table.

Ironically, Qualcomm and Broadcom will meet this Wednesday, February 14th, which is Valentine's Day. Even if both sides can't come to an agreement, Broadcom will continue with its proxy fight for control of Qualcomm's board. Voting will take place on March 6th. Both firms are meeting with proxy advisory firms ISS and Glass Lewis prior to Wednesday in an attempt to wrangle a recommendation from both. Recommendations made by these firms could lead funds holding millions of Qualcomm shares to vote in favor of the current board, or to vote for the slate nominated by Broadcom. If the latter nominees win, Broadcom will control Qualcomm's board and vote in favor of the takeover bid.

Qualcomm is known for its Snapdragon line of mobile chips used on by just about every smartphone manufacturer. Thanks to legal issues it has with Apple, the 2018 CDMA iPhone models will not employ Qualcomm's modem chip as they have in the past. Instead, Intel will most likely be the exclusive provider of this component even though Qualcomm has delivered  a superior chip over the last few years. Apple isn't expected to change its position, even if Broadcom buys out Qualcomm.

source: Reuters

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6 Comments

2. goodmorrow

Posts: 26; Member since: Feb 12, 2014

Here's my theory about this whole situation. Apple buys parts from Samsung, so when Apple gets bigger, Samsung gets bigger. Samsung has to use Qualcomm's chips for majority of its US variant products to show good faith to the US government... Apple wants to buy Broadcom. However, Apple wants Broadcom to buy Qualcom first. When Apple buys Broadcom it will have leverage against Samsung.

6. Marcwand3l

Posts: 456; Member since: May 08, 2017

If Broadcom successfully buys Qualcomm there is no way Apple will have enough cash to buy the newly created company. Bradcom wants to pay over 120 billion for Qualcomm and Qualcomm is not budging.

3. An.Awesome.Guy

Posts: 636; Member since: Jan 12, 2015

"Broadcom will control Qualcomm's board and vote in favor of the takeover bid." How obssessed are these to take Qualcomm even after several attempts and what kind of soap opera I am reading right now

4. Anonymous.

Posts: 423; Member since: Jun 15, 2016

Looks like Broadcom is in collaboration with Apple. Apple wants Qualcomm but they can't buy Qualcomm directly due to the ongoing lawsuits and fued. So, my theory is that Apple has sent Broadcom to buy Qualcomm and then when that is done, Apple then buys Qualcomm from Broadcom.

7. Marcwand3l

Posts: 456; Member since: May 08, 2017

You apple fanboys really are funny, you talk like Broadcom is Apple's dog or something. If Broadcom buys Qualcomm the conflict will Apple will only get worse.

5. Khyron

Posts: 401; Member since: Sep 28, 2015

But Google could buy Qualcomm insteand of apple and control the software and hardware and kick apples' and samsung's ass with new tailor Made Soc

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