WASHINGTON: Semiconductor giant Qualcomm on Monday said it rejected the $130 billion unsolicited merger bid from fellow chip maker Broadcom which could represent the biggest-ever takeover in the tech sector.
Singapore-based Broadcom made the offer last week in a deal that would consolidate two major players in the booming sector fueled by growth in smartphones and other connected devices.
The proposal “significantly undervalues Qualcomm relative to the company’s leadership position in mobile technology and our future growth prospects,” said Paul Jacobs, Qualcomm’s executive chairman, in a statement.
Steve Mollenkopf, Qualcomm’s chief executive, said the California company remains confident about its future.
“No company is better positioned in mobile, IoT (internet of things), automotive, edge computing and networking within the semiconductor industry,” he said.
“We are confident in our ability to create significant additional value for our stockholders as we continue our growth in these attractive segments and lead the transition to 5G,” he said, referring to the fifth generation wireless networks in the works.
Sweet or hostile?
It was not immediately clear how Broadcom would respond. The company could sweeten its bid in an effort to win over management or launch a “hostile” takeover by persuading enough shareholders to sell or install new board or management members.
Any merger deal would need to pass muster with Qualcomm shareholders and could face regulatory scrutiny in the United States and other markets.
Qualcomm shares rose one percent to $65.35 while Broadcom fell nearly one percent to $262.84 on the news.
Qualcomm has been facing a series of investigations around the world linked to its dominance in the smartphone chip segment.
Broadcom’s proposal followed CEO Hock Tan’s visit to the White House this month, where he met President Donald Trump and announced plans to move the tech company back to the United States from Singapore.
It comes as Qualcomm seeks a $47 billion acquisition of Dutch rival NXP, a deal that is the subject of an European Union anti-trust probe.
A merger with Broadcom would create a behemoth with some $51 billion in revenues, including those from NXP.
Broadcom, meanwhile, is seeking to buy US rival Brocade Communications in a deal being reviewed by Washington.
Broadcom and Qualcomm are both major makers of semiconductors used in the latest tech gadgetry.
The US firm is the leader in processors for smartphones and is expanding into new sectors, while Broadcom makes an array of chips for wireless communications, set-top boxes and electronic displays.—AFP