Published: Tue, November 14, 2017
Science | By Cecil Little

Chip maker Qualcomm rejects $130 bn Broadcom merger bid

Chip maker Qualcomm rejects $130 bn Broadcom merger bid

Reuters , citing "four people familiar with the matter", claims that Qualcomm's board of directors will review the $103 billion heavy offer, and could reply negatively straight away.

On Friday, Qualcomm shares concluded at $64.57, while Broadcom finished at $264.96. And that doesn't take into account ending Qualcomm's royalty rate feuds with Apple (aapl) and another unidentified phonemaker that are costing the company another $3 billion a year or more.

Beyond that, Qualcomm CEO Steve Mollenkopf said today he and the board of directors believe that the company can further create value for shareholders with the upcoming transition to 5G.

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Qualcomm's decision was expected, analysts said, as unsolicited bids often are rebuffed as a negotiating tactic.

"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.

Broadcom said it is "fully committed" to the takeover.

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Qualcomm provides chips to carrier networks to deliver broadband and mobile data. 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. They also stated that Broadcom "undervalues" them.

This is just not how these big acquisitions work, usually, these companies sit together, work for a while and try to negotiate important details and then go to the public. Qualcomm and Broadcom would be the third largest producer of semiconductors behind Intel and Samsung.

Singapore-based Broadcom made the offer last week in what would have consolidated two major players in the booming sector fueled by growth in smartphones and other connected devices. "We continue to believe our proposal represents the most attractive, value-enhancing alternative available to Qualcomm stockholders".

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Broadcom doesnt care about the outcome of that deal – it has stated that it wants to acquire Qualcomm with or without NXP.

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