Qualcomm asks Broadcom for more money, fewer risks to continue considering acquisition
Broadcom and Qualcomm’s months-long dance around the issue of the tech world’s largest potential acquisition in history seems far from over, even though the proposed buyer recently made its “best and final offer.”
Something about the two semiconductor companies’ latest meeting to discuss the terms of the deal clearly made Qualcomm think there was still room for negotiation. Otherwise, we wouldn’t be getting an “update” today on said meeting from Chairman of the Board Paul E.Jacobs, once again stressing how Broadcom “materially undervalues Qualcomm.”
Although completely “unacceptable”, the newest Broadcom proposal could be sweetened by including enhanced compensation for what Qualcomm feels are very high breakup risks.
A “significant reverse termination fee” was promised back on February 5 in what Broadcom called the “unlikely event we are unable to obtain required regulatory approvals.”
A “ticking fee” also guaranteed an unspecified “increase in the cash consideration payable to Qualcomm stockholders” if the transaction were to take more than a year to close. But said fees are described as far from acceptable, especially considering certain “problematic” decisions Broadcom insists on controlling.
Bottom line, $82 per share and the current small print of the takeover offer are not enough to get one of the world’s largest chip makers under the ownership of an even larger semiconductor company.
It remains to be seen if Broadcom is willing to make a renewed “final” bid after already bumping up the initial $70 per share offer, or if Qualcomm needs to continue executing its own “growth strategy”, aiming to deliver “superior near- and long-term value to its stockholders.”