A Qualcomm-Broadcom marriage could be hammered out on Valentines Day, according to published reports — or Qualcomm could once again reject Broadcom’s proposal.
Broadcom continues its quest to acquire Qualcomm with the announcement today that it has lined up the necessary funding to cover the cash portion of the proposed $120 billion purchase. Broadcom has signed agreements with a dozen financial institutions to cover $100 billion of the transaction, or $60 per share of its $82 per share offer for Qualcomm. The two companies are expected to meet this week to discuss Broadcom’s proposal, with the meeting planned for Wednesday according to Reuters and CNBC.
According to a letter to Qualcomm Executive Chairman of the Board of Directors Paul Jacobs which Broadcom sent last Thursday and posted Friday, Broadcom said that it offered to meet with Qualcomm over the weekend but that Qualcomm wanted to put the meeting off until Tuesday at the earliest — after both companies are scheduled to meet with their respective proxy advisor firms.
“We hope that your willingness to meet with us reflects Qualcomm’s genuine intent to reach an agreement with respect to our February 5 proposal,” wrote Hock Tan, president and CEO of Broadcom. “After having met with most of your largest stockholders this past week, we have no doubt that this is their strong desire as well.”
He went on to add that Broadcom’s proposed acquisition is “is highly favorable to Qualcomm and its stockholders” and that it includes terms under which Broadcom would pay Qualcomm $8 billion if regulatory agencies scuttle the deal. Broadcom reiterated that its offer of $82 per share is its “best and final offer.”
Qualcomm, for its part, maintains that Broadcom is still undervaluing the company as well as underestimating regulatory risk that the transaction would not be approved. Qualcomm has said that its talks with Broadcom started 18 months ago and urged shareholders to reject the offer at the company’s upcoming annual meeting on March 6. Still, board Chairman Jacobs said in his own letter to Broadcom last week that Qualcomm was willing to meet to see if Broadcom “can address the serious deficiencies in value and certainty in its proposal.” Qualcomm has also cited regulatory risk in both the U.S. and China as one of its top concerns about the merger.
Broadcom also recently published a Q&A with its antitrust attorney, Daniel Wall, who accused Qualcomm management of “trying to hide behind a smokescreen of unspecified ‘regulatory risk'” to avoid the deal and that saying that the company has been “fomenting opposition to this deal in China.”
As it considers the Broadcom offer, Qualcomm is juggling its proposed acquisition of semiconductor company NXP, and last week extended through Feb. 23 its bid to NXP shareholders — who have largely declined to take Qualcomm up on its offer. Meanwhile, Broadcom says its offer of $120 billion for Qualcomm “is premised on either Qualcomm acquiring NXP Semiconductors…on the currently disclosed terms of $110 per NXP share or the transaction being terminated…”
NXP shares were trading around $116 per share on Monday, having seen a slight impact from last week’s market volatility but still trading well above Qualcomm’s $110 per share offer.