Qualcomm has hit back at what it describes as 'a blatant attempt to seize control of the Qualcomm Board in order to advance Broadcom's acquisition agenda', maintaining that its smaller rival's unsolicited offer to acquire the company 'dramatically undervalues Qualcomm to Broadcom's benefit.'
Broadcom made its initial, unsolicited offer of £98.8 billion to acquire twice-the-size rival Qualcomm back in early November, with company president and chief executive Hock Tan talking of his 'great respect for the company founded 32 years ago by Irwin Jacobs, Andrew Viterbi, and their colleagues, and the revolutionary technologies they developed'. Qualcomm, however, was less than impressed and quickly rejected the offer with claims it 'significantly undervalues' the company and NXP Semiconductor, a company Qualcomm itself is in the process of acquiring.
Apparently not liking the sound of the word 'no' Tan quickly put together a proposal to replace the Board of Directors in an attempt to push the deal through - a classic hostile takeover. 'We have heard from many Qualcomm stockholders who have expressed their desire for Qualcomm to engage with us,' claimed Tan in support of the move. '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.'
Qualcomm's current Board of Directors, however, is less than impressed. 'Broadcom and Silver Lake [Partners, a private equity firm backing Broadcom's acquisition bid] are effectively asking stockholders to foreclose options and make a decision now on a non-binding proposed transaction which could not be completed for well over a year, if ever, given the magnitude of regulatory issues, the absence of commitments by Broadcom to resolve those issues, Broadcom's lack of committed financing, and the uncertainty surrounding its transition from Singapore to the United States,' the company fumed in a statement late last night. 'Qualcomm's Board is composed of 11 world-class directors, 9 of whom are independent and 4 of whom have been added in the last 3 years, and all of whom are firmly committed to acting in the best interests of all Qualcomm stockholders.
'Qualcomm believes that this action is a blatant attempt to seize control of the Qualcomm Board in order to advance Broadcom's acquisition agenda. These nominees are inherently conflicted given Broadcom's desire to acquire Qualcomm in a manner that dramatically undervalues Qualcomm to Broadcom's benefit.'
Holders of voting shares will be given the opportunity to reject or accept Broadcom's nominations - and, thus, the deal itself - at the company's 2018 Annual Meeting of Stockholders in March next year.
April 7 2020 | 14:00