Qualcomm Still Rejects Broadcom’s $121 Billion Offer

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That didn’t take long. After a face-to-face meeting with its suitor, Qualcomm Inc. (NASDAQ: QCOM) rejected the “last and final” offer of $82 a share in cash and stock from Broadcom Ltd. (NASDAQ: AVGO). Qualcomm Chair Paul Jacobs said in his letter to Broadcom CEO Hock Tan that the offer materially undervalues Qualcomm, has an unacceptably high level of risk and is not in Qualcomm’s best interests.

When Qualcomm said earlier this week that it was willing to meet with Broadcom to discuss the proposal, there was some hope (among investors, at least) that a deal would be struck.

That probably was always wishful thinking. More likely is that Qualcomm’s board wanted to cover its, uh, bases against a possible charge of not fulfilling its fiduciary duty in rejecting the Broadcom deal out of hand with no face-to-face consultation.

Broadcom has offered a slate of 10 nominees for Qualcomm’s board of directors at the annual shareholders’ meeting currently scheduled for March 6.

In his letter to Tan, Jacob called the meeting “constructive” because Broadcom representatives made concessions on divesting some assets in order to avoid possible antitrust actions in an acquisition of Qualcomm. But:

At the same time, Broadcom continued to resist agreeing to other commitments that could be expected to be required by the FTC, the European Commission, MOFCOM and other government regulatory bodies. Broadcom also declined to respond to any questions about its intentions for the future of Qualcomm’s licensing business, which makes it very difficult to predict the antitrust-related remedies that might be required. In addition, Broadcom insists on controlling all material decisions regarding our valuable licensing business during the extended period between signing and a potential closing, which would be problematic and not permitted under antitrust laws.

Jacob also said the board is open to further discussions with Broadcom “to see if a proposal that appropriately reflects the true value of Qualcomm shares, and ensures an appropriate level of deal certainty, can be obtained.”

Qualcomm stock traded up about 0.6% at $65.69 in the noon hour Friday. The 52-week range is $48.92 to $69.28 and the 12-month consensus price target is $72.35.

Broadcom shares traded down about 0.2% to $251.38, in a 52-week range of $202.61 to $285.68. The stock’s 12-month consensus price target is $317.41.