Qualcomm rallies investors against “undervalued” Broadcom acquisition proposal
San Diego-based chipmaker Qualcomm has appealed to shareholders in a letter posted yesterday, urging them to vote for the company’s choice of Board of Directors to fend off an acquisition attempt from competitor Broadcom.
The San Jose firm, which suggested its own board members in December, is looking to take over Qualcomm with an offer at $70 per share. Investors have been split on the offer with many wanting a higher offer while others are more willing to jump ship after years of share price stagnation. In the past couple of quarters, Qualcomm has been busing innovations out to market in an effort to exemplify the value of its portfolio.
Qualcomm’s arguments against Broadcom focus on its counterpart’s promises that stock owners will get immediate cash on the acquisition, that the industry’s largest-ever deal would close in 12 months and that regulators would approve of the deal in quick order, claiming that all of them are false.
In over two months since making their hostile proposal, Broadcom hasn’t taken the necessary steps to start the regulatory approval process in most countries around the world. This is the largest proposed technology transaction in history and will require thorough reviews from both antitrust regulators and national security groups in multiple countries around the world.
Other concerns included Broadcom facing two delays for its acquisition of Brocade, which closed on November, due to US scrutiny on national security issues. This interlines with concerns of the domiciling of Broadcom, which is in the process of being moved from Singapore to the United States.
Broadcom combated the letter with a statement today, saying that Qualcomm’s claims were “simply unfounded, misleading, and a disservice to Qualcomm stockholders.” It said it has held initial talks with regulatory agencies and that investors have sent the company support for the acquisition.
There is no antitrust issue concerning this transaction that could not be satisfactorily resolved during the merger clearance process. It is undeniable that the two businesses are highly complementary, and Broadcom has already identified the potential regulatory requirements for closing the deal, all of which we can satisfy in a timely manner.
Qualcomm’s annual stockholders meeting is scheduled for March 6, when board nomination ballots will be counted.