Chipmaker Qualcomm has rejected Broadcom's latest $121 billion takeover offer on the grounds that it still undervalues the company.
The Qualcomm board has unanimously rejected the unsolicited offer of $82 per share – consisting of $60 in cash and $22 in Broadcom stock, the company said in an announcement.
As well as believing that the offer undervalues Qualcomm, the board has decided that the offer “falls well short of the firm regulatory commitment the Board would demand given the significant downside risk of a failed transaction,” the company said in a letter to Broadcom CEO Hock Tan.
But the board has offered to meet with Tan to allow him to explain how Broadcom would attempt to overcome these shortfalls.
While Broadcom has previously described the $121 billion bid as its “best and final offer,” the Qualcomm board has asked Tan to provide a detailed answer to the question of what the true highest price Broadcom is prepared to offer.
It noted that the proposed offer ascribes no value to Qualcomm's recent $39 billion acquisition of NXP Semiconductors, to the expected resolution of the company's current licensing disputes or to the opportunities presented by the evolution to 5G.
The board has also called on Tan to clarify whether Broadcom is willing to commit to take whatever actions would be necessary to clear the regulatory hurdles and address the customer and licensee risk that Qualcomm would be exposed to during the transaction period.
“It is also indisputable that if Qualcomm entered into a merger agreement and, after an extended regulatory review period the transaction did not close, Qualcomm would be enormously and irreparably damaged,” the board said.
“If you are not willing to agree to do whatever is necessary to ensure a transaction closes, we will need you to be extremely clear and specific about exactly what actions you would refuse to take, so that we can properly evaluate the risk to Qualcomm's shareholders.”
Broadcom recently submitted an increased bid for Qualcomm, after Qualcomm's board unanimously rejected the initial $105 billion bid lodged in November.
The increased offer forms part of Broadcom's attempt to mount a hostile takeover of its rival.