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Qualcomm Board Rejects $121B Buyout Offer From Broadcom

The Qualcomm headquarters building in San Diego, Nov. 2, 2011.
Associated Press
The Qualcomm headquarters building in San Diego, Nov. 2, 2011.

The Qualcomm Board of Directors Thursday unanimously rejected a revised $121 billion buyout offer from Broadcom.

Though the deal would have been the largest ever in the electronics industry, the Qualcomm board chairman in a letter wrote that Boardcom's $82-per- share offer was "inadequate" because it undervalued the San Diego-based chipmaker and would come with regulatory uncertainty. But the board is open to meeting with Broadcom leaders in a commitment "to exploring all options for maximizing shareholder value."

This was the latest offer to be rejected by Qualcomm. Broadcom earlier this week said the deal was its "best and final" offer and one that CEO Hock Tan told the New York Times "any rational board would consider."


In his letter, Qualcomm board Chairman Paul E. Jacobs said he would like to hear if Broadcom is willing to pay a higher per-share price, one that takes into account the value of Qualcomm's purchase of NXP Semiconductors, the licensing disputes Jacobs believes will resolve in Qualcomm's favor and the opportunity presented for the company in the development of 5G, the next generation of cell phone technology.

The board also said it would be "extremely important" that Broadcom commit to any means necessary of clearing the likely regulatory hurdles it would face with the purchase.

RELATED: Broadcom Raises Qualcomm Bid To More Than $121 Billion

"If Qualcomm entered into a merger agreement and, after an extended regulatory review period the transaction did not close, Qualcomm would be enormously and irreparably damaged," Jacobs wrote. "If you are not willing to agree to do whatever is necessary to ensure a transaction closes, we will need you to be extremely clear and specific about exactly what actions you would refuse to take, so that we can properly evaluate the risk to Qualcomm's shareholders."

Like the deal rejected by the Qualcomm board in November, this one would have paid Qualcomm shareholders $60 per share in cash. But the latest offer included an increase in Broadcom stock that would be paid to Qualcomm shareholders — $22 per share, up from $10.


Broadcom is incorporated and currently based in Singapore, but Tan announced late last year while visiting President Donald Trump at the White House that the company would return its corporate headquarters to the U.S., using San Jose as a base.

Buying Qualcomm would make Broadcom the third-largest chip maker, behind Intel Corp. and Samsung Electronics Co. The combined business would become the default provider of a set of components needed to build each of the more than one billion smartphones sold every year.

RELATED: Qualcomm Denounces Broadcom’s ‘Hostile Takeover’ Bid

The company's hostile takeover attempt has come at a vulnerable time for Qualcomm, which has been embroiled in a long-running legal dispute with Apple and is facing several large fines from governing bodies across the globe. The most recent such fine levied against the San Diego company came from the European Union, which accused Qualcomm of breaking the EU's antitrust laws to the tune of $1.23 billion. Qualcomm said it would challenge that fine.

If Broadcom is ultimately successful in its takeover attempt, the impact on San Diego could be severe. Qualcomm is one of the few major corporations with a global reach to be headquartered in a city known mainly for tourism, and smaller defense and life sciences firms.

The company is one of the region's largest private employers, and the family of co-founder Irwin Jacobs is one of the area's most generous philanthropists, including giving to KPBS.