Qualcomm Inc., the U.S. semiconductor company, turned down Broadcom’s $121 billion buyout offer on Thursday. Broadcom had proposed the acquisition of all outstanding shares of Qualcomm for $82 per share that breaks down to $60 in cash and $22 in Broadcom stock. But the Qualcomm’s board of directors unanimously rejected the proposal stating that, it 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.
“Your proposal ascribes no value to our accretive NXP acquisition, no value for the expected resolution of our current licensing disputes and no value for the significant opportunity in 5G. Your proposal is inferior relative to our prospects as an independent company and is significantly below both trading and transaction multiples in our sector”, mentioned the board in a letter to Broadcom.
The board feels that the proposal is inferior considering Qualcomm’s prospects as an independent company. Qualcomm is also open for a meeting with Broadcom to discuss the options for maximizing the shareholder value. Qualcomm had previously struck down the takeover attempt from Broadcom for $70 per share in November 2017 using a similar argument.
Qualcomm presently has a market cap of $92 billion, despite months of deal talks. This makes it obvious that the two companies have a lot to discuss to make any further progress.