Broadcom Offer Undervalues Qualcomm, Neglects Regulatory Risks, Says CEO Mollenkopf

Qualcomm vs. Apple

The Story:

U.S. chipmaker Qualcomm is preparing to fend off a bid from rival Broadcom Ltd. to take over the company for about $105 billion. The decision to rebuff the offer may be announced as early as this week.

It will set the stage for one of the biggest-ever takeover battles in the world of technology.

Important Because:

It’s not unusual for a takeover target to reject an initial bid in order to push the buyer into raising the offer.

Unfriendly takeover bids such as this one are extremely difficult to pull off, often ending up as long-drawn-out affairs with no clear winner until a final decision is reached.

This Happened:

The Broadcom offer is a 28% premium on Qualcomm stock’s closing price on Thursday.

Qualcomm CEO Steve Mollenkopf has solicited feedback from shareholders, and the $70 per share bid is thought to undervalue the company.

The offer also neglects to price in any uncertainty around regulators approving the deal, said Mollenkopf.

Qualcomm’s board may meet on Sunday to discuss its strategy to handle the unsolicited bid.

Broadcom may raise the bid through debt financing and other means, but their move in that direction is unclear.


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