In a statement released Monday, Qualcomm executive chairman Paul Jacobs said, "It is the Board's unanimous belief that Broadcom's proposal significantly undervalues Qualcomm relative to the Company's leadership position in mobile technology and our future growth prospects".
Qualcomm's stock has fallen 5% this year. The language, obviously, left open the door to a higher bid.
If Broadcom makes a hostile bid, Qualcomm's governance rules would allow the rival to submit its own slate for the entire 10-member board by the December 8 nomination deadline. Hawk Tan, the Chief Executive at Broadcom, said in an announcement that this integral exchange will put the joined undertaking as a pioneer in the worldwide correspondence advertises with an wonderful arrangement of items and advancements.
Tom Horton, Presiding Director for Qualcomm also believes that the management is focused on increasing value for shareholders.
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Last week, Broadcom proposed the merger - totaling $130 billion including debt it would assume - amounting to the largest-ever technology acquisition, according to Dealogic. Tan is known as a fierce cost cutter, who buys companies and eliminates overhead and cuts back on research and development. The board has not made any official statements, but has allegedly met on Sunday to discuss the offer. "A properly-timed raise to the price (perhaps coincident with more aggressive moves) might easily be plausible". It's also a timely bid Qualcomm, whose earnings this year have been hurt by a global legal fight with Apple over its licensing fees for patents.
Broadcom, meanwhile, is seeking to buy United States rival Brocade Communications in a deal being reviewed by Washington. Its own board similarly thinks that the offer undervalues the company and NXPs shares were trading above Qualcomms offer.
Overall, Broadcom's bid is a very ambitious attempt to grow its share of the market for components that go into mobile phones. Broadcom's (avgo) shares, up nearly 50% so far this year, were largely unchanged on Monday at $264.28.