Earlier this week we learned that rival chip maker, Broadcom, would be making a $130 billion bid for Qualcomm. The deal would merge the two companies, creating the third largest chip maker in the world. However, it seems that Qualcomm may not be interested in the unsolicited bid, as reports indicate that the company will reject the offer.
According to a source speaking with the Financial Times newspaper, Qualcomm will reject the bid due to the regulatory risks involved. Such a move could be seen as monopolistic in the US and would be placed under much scrutiny.
On top of that, despite the overall buyout being worth $130 billion, the source claims that at $70 per share, Qualcomm considers the offer to be too low. Another source speaking with the paper said that the offer is seen as “opportunistic” as share prices have dipped in the wake of Qualcomm’s legal battle with Apple.
The lack of royalty payments coming in is also doing damage to Qualcomm’s bottom line, with the most recent earnings report showing a 90 percent drop in profits compared to the same quarter last year.
KitGuru Says: It seems hard to imagine turning down $130 billion, but it seems that Qualcomm’s board may be happy to soldier on doing their own thing. This also indicates that Qualcomm is perhaps confident in its chances at court against Apple, which will lead to the company bouncing back. The offer may also undervalue Qualcomm’s vast patent portfolio, which includes various 5G technologies that will come into play over the coming years.