Qualcomm Rejects Broadcom Board Nominees, Sets Up Proxy Battle

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In a decision that should surprise approximately no one, Qualcomm Inc.’s (NASDAQ: QCOM) board of directors announced Friday morning that it has rejected all 11 board candidates nominated by Broadcom Ltd. (NASDAQ: AVGO) to replace Qualcomm’s current board. That sets the stage for a proxy fight between the two chipmaking heavyweights at Qualcomm’s March 6 shareholders’ meeting.

On November 6, Broadcom offered to acquire Qualcomm for $70 a share in cash and stock. A week later, Qualcomm’s board unanimously voted to reject the offer, claiming that it undervalued the company. Broadcom noted its offer stands whether or not Qualcomm is successful in its $110 per share offer for NXP Semiconductors N.V. (NASDAQ: NXPI).

Broadcom collaborated with another large Qualcomm investor, private equity firm Silver Lake Partners, to nominate a slate of 11 candidates to replace Qualcomm’s entire board.

Qualcomm’s board said Friday morning that it had “unanimously determined not to nominate any of the 11 candidates.” The announcement continued:

After a thorough review of the Broadcom-Silver Lake nominees, the Governance Committee concluded that these nominees are inherently conflicted and would not bring incremental skills or expertise to the Qualcomm Board. … Broadcom and Silver Lake are asking Qualcomm stockholders to turn over control of their Company now to the hand-picked Broadcom-Silver Lake nominees based on a proposal that dramatically undervalues Qualcomm and is not actionable due to its significant regulatory uncertainty, which may not be resolved for 18 months, if ever, and lack of committed financing.

On December 6, Broadcom filed a preliminary proxy statement with the U.S. Securities and Exchange Commission and this morning filed an amendment to that initial filing.

Qualcomm stock traded up about 0.3% early Friday morning, at $64.58 in a 52-week range of $48.92 to $69.28. The 12-month consensus price target on the stock is $64.94.

Broadcom shares traded up about 0.4% to $262.62, in a 52-week range of $173.31 and $285.68. The consensus price target is $316.22.