For several months now, Broadcom has been attempting to acquire Qualcomm. Initially, Broadcom offered a $130 billion buyout, and then upped the ante to $145 billion. On both occasions, Qualcomm declined, which led to Broadcom announcing a hostile takeover strategy, which hinges on swaying shareholders at Qualcomm’s next shareholder meeting. Since then, Qualcomm has been moving forward with its own proposed acquisition of NXP and recently raised its offer to buy the company to $44 billion, this has had the knock on effect of Broadcom reducing its own buyout offer for Qualcomm.
Previously, Broadcom’s ‘best and final’ buyout offer of $145 billion was based on Qualcomm completing its acquisition of NXP for $38 billion. However, it seems talks on that front have been stagnating, forcing Qualcomm to offer NXP $44 billion for a buyout. It seems that this has caused Broadcom to reevaluate Qualcomm’s value once again, reducing its offer from $82 per share to $79 per share, knocking off around $4 billion in total value for the deal.
In Broadcom’s statement, the company explains that it believes that “a responsible Qualcomm board could have preserved value” by working with Broadcom on the NXP transaction. Broadcom evidently did not have a seat at the table for these discussions despite its serious buyout offers, which likely has something to do with the fact that Qualcomm doesn’t want to sell in the first place.
In Broadcom’s words, “Qualcomm’s board acted against the best interests of its stockholders” by adding excessive value to the NXP deal. While Broadcom doesn’t agree with Qualcomm’s decision in this instance, it is still determined to get its hands on Qualcomm one way or another and “remains committed” to delivering maximum value to Qualcomm stockholders.
KitGuru Says: At this point, Broadcom has given up on trying to convince Qualcomm’s board to sell, and is instead appealing to shareholders instead. This particular announcement appears to be a move to disrupt confidence in Qualcomm’s board in an effort to try and push a sale through.