Broadcom has escalated its attempts to acquire larger rival Qualcomm, proposing a change to the company's board of directors as the first salvo in a hostile takeover attempt.
Broadcom first signalled its desire to acquire Qualcomm in early November, offering £98.8 billion to acquire both Qualcomm and its own ongoing acquisition NXP Semiconductor in a deal that would make Broadcom an absolute giant in the embedded and mobile markets. Despite having half the headcount pulling half the revenue, Broadcom appeared serious about its David-versus-Goliath offer, with company chief executive and president Hock Tan claiming to have 'great respect for the company founded 32 years ago by Irwin Jacobs, Andrew Viterbi, and their colleagues, and the revolutionary technologies they developed.'
Qualcomm's rejection of the unsolicited offer, which it claimed 'significantly undervalues' the company, appears to have stretched that respect to breaking point. The company has announced its intention to file a proxy statement with the US Securities and Exchange Commission calling for a clean slate of '11 independent, highly qualified individuals for elections to Qualcomm's Board of Directors' - a move which, if successful, would oust the current Board which voted against the acquisition.
'We have heard from many Qualcomm stockholders who have expressed their desire for Qualcomm to engage with us. We also continue to receive positive feedback from customers and, having had initial meetings with certain relevant antitrust authorities, remain confident that any regulatory requirements necessary to complete a combination will be met in a timely manner,' said Tan in support of his company's hostile takeover attempt. 'Although we are taking this step, it remains our strong preference to engage in a constructive dialogue with Qualcomm.
'We have repeatedly attempted to engage with Qualcomm, and despite stockholder and customer support for the transaction, Qualcomm has ignored those opportunities. The nominations give Qualcomm stockholders an opportunity to voice their disappointment with Qualcomm's directors and their refusal to engage in discussions with us. In light of the significant value our proposal provides for Qualcomm stockholders, we believe Qualcomm stockholders would be better served by new independent, highly qualified nominees who are committed to maximising value and acting in the best interests of Qualcomm stockholders.'
The nominations would need to be ratified by holders of voting shares in the company, which if granted would give Broadcom effective control of the board and allow the acquisition to proceed.
July 1 2020 | 17:34