The most popular mobile chip maker isn’t exactly swimming in dough. In fact, it’s in danger of losing a number of high-profile lawsuits in a couple of markets. But it’s not desperate yet, at least not to the point of accepting Broadcom’s best and, according to the latter, final offer to buy it. In a rather strongly-worded announcement and letter, Qualcomm announces that its board has unanimously rejected Broadcom’s higher offer amounting to a hefty $121 billion .
That amount is already 17% higher than Broadcom’s previous bid, which it offered $70 per share. This latest and last one offers $82 per share, split between $60 cash and the rest as Broadcom share. That’s just not enough, says Qualcomm.
Qualcomm’s rejection is bases on multiple concerns, not least of which is that it believes the offer undervalues the company’s real worth. Qualcomm also says that it doesn’t take into account the fact that Qualcomm is in the process of acquiring NXP Semiconductors NV. Broadcom, for its part, says its offer.is based on the expectation that the NXP deal will either close at the initial offer or fail.
Qualcomm’s rejection is definitely interesting considering the company’s current economic situation. Although not in the red, Qualcomm has seen better days. It now mostly relies on its patent licensing business more than actual chip sales, a business that is at the heart of most of the lawsuits against it. Already it has lost some of those, being fined and ordered to change its business practices. It is, however, bullish that it will be able to turn things around with a new portfolio of products and new technologies.
That promise and vision will be put to the test on March 6. That’s when Qualcomm’s shareholders will vote whether to replace the board with Broadcom’s nominees or not. If Broadcom manages to get its own people there, then its takeover bid is almost as good as done.
[UPDATE: An earlier version of this article included typos, which have been corrected]