Qualcomm rejects Broadcom acquisition bid

Qualcomm rejects Broadcom acquisition bid

The technology sector's largest takeover ever has been denied after chipmaker Qualcomm rejected a $130bn (£99bn) buyout offer from Broadcom.

Shares in Broadcom and Qualcomm both dipped slightly as the market opened.

"The Board and Management are singularly focused on driving value for Qualcomm's shareholders", Presiding Director for Qualcomm Incorporated, Tom Horton added. "We are confident in our ability to create significant additional value for our stockholders as we continue our growth in these attractive segments and lead the transition to 5G".

Broadcom isn't taking no for an answer in its effort to take over Qualcomm.

The company said its offer of 70 dollars per share represents a 28 percent premium over the closing price of Qualcomm's common stock on November 2, 2017, the last unaffected trading day prior to media speculation regarding a potential transaction, and a premium of 33 percent to Qualcomm's unaffected 30-day volume-weighted average price.

"Qualcomm's "thanks, but no thanks" response to the unsolicited bid by Broadcom isn't surprising and we would be surprised if at this point, Broadcom didn't move forward with a proxy fight", Loop Capital analyst Betsy Van Hees told Reuters. According to sources, the company was gearing up to submit a schedule of directors by Qualcomm's December 8 nomination deadline.

The easiest option, however, would be to talk to Qualcomm's board and agree on a higher price.

On Friday, Qualcomm shares concluded at $64.57, while Broadcom finished at $264.96.

"This complementary transaction will position the combined company as a global communications leader with an impressive portfolio of technologies and products", Hock Tan, president and chief executive officer of Broadcom, said in a statement. It is engaged in a patent infringement dispute with Apple Inc, and is also trying to close its $38 billion acquisition of automotive chipmaker NXP Semiconductors NV after signing a deal in October 2016. Qualcomm does not plan to significantly raise its price for NXP as a defensive strategy to make its acquisition by Broadcom more expensive, according to one of the sources.

Qualcomm said it would "assess the proposal in order to pursue the course of action that is in the best interests of Qualcomm shareholders".

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