Last week, Broadcom announced its intent to purchase massive mobile chip maker Qualcomm. At the time, Broadcom said that it was prepared to offer as much as $130 billion dollars to take control of Qualcomm. That’s no small amount of money, and it would have ranked as the tech industry’s largest acquisition ever.
Despite that, it seems that Broadcom’s offer wasn’t enough for Qualcomm’s board of directors. Qualcomm announced today it has rejected Broadcom’s takeover bid, and for now, it will remain subsidiary to no one. Keep in mind, this offer from Broadcom wasn’t solicited, so it isn’t as if Qualcomm and Broadcom were in talks about a merger before Broadcom plopped its $130 billion bid on the table.
That’s an eye-watering amount of money, but today, Qualcomm’s board of directors is saying that it “significantly undervalues” their company. “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,” said Qualcomm executive chairman and chairman of the board Paul Jacobs in a statement today.
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. Qualcomm is already at the front of the pack when it comes to mobile chipmaking, and it stands to make a lot of money from that position as carriers begin to roll out 5G networks.
Finally, it seems the board was concerned about a fight with regulators, even though Broadcom was willing to make some concessions to appease them. Those concerns all came together to make Qualcomm’s answer to Broadcom a big fat no, so now the ball is back in Broadcom’s court. Does it leave Qualcomm be or does it come back with an even larger and more tempting offer? Time will tell, but if Broadcom wants to add Qualcomm to its portfolio, it’ll definitely have to up the stakes.