Last week, Broadcom had publicly announced that it’s making a record-breaking bid of $130 billion to takeover Qualcomm. Today, Qualcomm has responded by saying that it’s rejecting the $130 billion takeover offer, reports The Wall Street Journal.
Qualcomm’s board of director unanimously rejected the offer and said that Broadcom’s offer “dramatically undervalues Qualcomm,” and “comes with significant regulatory uncertainty.” For its part, Qualcomm’s concerns aren’t wrong when it comes to regulatory uncertainty. Qualcomm and Broadcom are two of the biggest chipmakers. It’s not out of the question to assume that both comes would face anti-trust regulatory issues, among other problems.
Qualcomm’s board and other leaders believe that the company is doing well, despite the legal troubles with Apple. In addition, they say that Qualcomm is well positioned to “lead the transition to 5G.” This is of course true but it first has to settle its legal disputes with Apple and maintain its control over the Android market. After further investigation, Qualcomm’s board believes that they can do very well without accepting Broadcom’s offer.
There’s something interesting we should discuss because it doesn’t seem like Qualcomm is opposed to a takeover. Looking at the note that says “dramatically undervaluing” Qualcomm, this opens the door for a higher offer that Broadcom could potentially make and Qualcomm then accepting, should any higher offer come. This obviously is a negotiation tactic that Qualcomm is starting, but you can’t blame them because such agreements have to be further negotiated. Most of these large-scale deals are worked out behind closed doors before everything is officially announced. It might be a safe bet that Qualcomm may further pursue higher bid talks and other things before publicly announcing anything.