Following Wednesday meeting with Broadcom, Qualcomm board is “focused on maximizing value” for shareholders

While Qualcomm’s Board still says Broadcom’s proposed acquisition price of $120 billion undervalues the San Diego-based company, company leaders for the first time have expressed a willingness to sell.

Executives from both companies met in person on Valentine’s Day. From a Feb. 16 letter to Broadcom CEO Hock Tan from Qualcomm’s Chairman Paul Jacobs: “While the current Broadcom proposal is unacceptable, our board is intensely focused on maximizing value for Qualcomm stockholders, whether through executing on its growth strategy or by selling the Company. Our 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. If such a proposal cannot be obtained from Broadcom, our Board is highly confident in Qualcomm’s ability to deliver superior near- and long-term value to its stockholders by continuing to execute its growth strategy.”

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 Singapore-based company has also backed off of an attempt to replace Qualcomm’s 11-member board of directors with board members it selected. However, Broadcom still wants to gain majority control of the Qualcomm board by inserting six members at Qualcomm’s March 6 annual shareholders meeting.

In a statement, Tan said Qualcomm shareholders support the proposed purchase price of $82 per share. “They have welcomed our willingness to provide for appropriate continuity on the Qualcomm board, and have also expressed a desire for a definitive mechanism of achieving such continuity. Reducing the number of nominees we are seeking to a simple majority provides precisely that mechanism.”

Qualcomm reiterated its concern over the regulatory machinations that would make or break a potential acquisition. Regulators in the U.S., European Union and China would all need to give their consent. Another sticking point is what would happen to Qualcomm’s IP licensing business during the closing period. “Broadcom also declined to respond to any questions about its intentions for the future of Qualcomm’s licensing business,” Jacobs wrote,” 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.”


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