Qualcomm says no to Broadcom, but remains ‘open to further discussions’

Qualcomm this morning said it rejected Broadcom’s latest takeover bid, but couched its rebuff with promises to continue to remain open to further negotiations.

“The [Qualcomm] Board remains unanimously of the view that this proposal materially undervalues Qualcomm and has an unacceptably high level of risk, and therefore is not in the best interests of Qualcomm stockholders,” Qualcomm’s chairman wrote in the company’s letter to Broadcom’s CEO in a release on the topic published this morning.

Added Qualcomm: “That said, our Board found the meeting to be constructive in that the Broadcom representatives expressed a willingness to agree to certain potential antitrust-related divestitures beyond those contained in your publicly filed merger agreement.”

Qualcomm outlined several major potential sticking points it sees in the deal, including that Broadcom wouldn’t discuss the future of Qualcomm’s licensing business under a merger scenario, and that Broadcom’s breakup fee isn’t enough to counter the risks involved in the transaction.

“Our Board is open to further discussions with Broadcom to see if a proposal that appropriately reflects the true value of Qualcomm shares, and ensures an appropriate level of deal certainty, can be obtained. If such a proposal cannot be obtained from Broadcom, our Board is highly confident in Qualcomm’s ability to deliver superior near- and long-term value to its stockholders by continuing to execute its growth strategy,” Qualcomm’s Paul Jacobs concluded in the company’s letter.

Broadcom on Feb. 5 raised its bid for Qualcomm to $121 billion and called it Broadcom’s “best and final” offer. As Reuters noted, Broadcom kept the cash part of its initial offer at $60 per share but raised the stock portion from $10 to $22 per share.

The two companies held a meeting to discuss the proposed transaction on Wednesday, and Qualcomm’s rejection of Broadcom’s proposed takeover essentially puts the ball back into Broadcom’s court. Broadcom has not yet issued a response to Qualcomm’s latest action.

If the transaction is consummated, Broadcom’s $121 billion hostile takeover of Qualcomm would be the biggest deal in the tech industry ever. However, it would likely fundamentally change Qualcomm’s business—which could have significant ramifications for the world’s wireless industry that continues to use a range of Qualcomm-developed technology.