Published: Sat, February 10, 2018
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Qualcomm rejects Broadcom's increased offer of $121 billion United States dollars

Qualcomm rejects Broadcom's increased offer of $121 billion United States dollars

"Is it $82 per share or is it higher?" The proposed fee is set at 6 percent of the $121 billion bid's cash portion. In the filing, Broadcom CEO Hock Tan writes to Qualcomm executive chairman Paul Jacobs that he was "astonished" Qualcomm did not accept a weekend meeting to discuss a potential merger.

Broadcom was meeting with its advisers late on Sunday to finalise an offer that values Qualcomm between $80 and $82 per share. Alternatively, Qualcomm may terminate the deal, which is also an option stipulated in Broadcom's acquisition offer. Typically, such break-up fees equate to approximately 3 per cent to 4 per cent of a deal's size.

As for the market experts, Tan's accomplishments this far are likable.

Additional details regarding the terms of the improved offer were included in a letter delivered by Broadcom to the Qualcomm board of directors. A victory in that effort would void the current opposition. In a statement on Thursday, the San Diego based company said that the bid substantially undervalues Qualcomm and is well short of its regulatory commitment required to gain support for such a deal.

Qualcomm's contention that the chipmaker's future is brighter as a standalone company has become a tougher sell, given the multiple challenges that have cropped up in the past two years. This is because Qualcomm already manufactures chips for Samsung and Apple smartphones. Qualcomm has countered that it expects to win in court over time. Qualcomm said it would challenge that fine. Qualcomm says that the bid does not take into account its purchase of NXP Semiconductors NV for $38 billion.

The revised price also includes taking over $25 billion in net debt from Qualcomm. The fight isn't over yet because shareholders can decide otherwise next month. That is a lot of money but Qualcomm's board was firm with the decision. Considering that business makes up a hefty chunk of Qualcomm's pretax profit, the resulting margin pressure will require steep cost cuts at the remaining business.

Qualcomm's licensing business is central to both its profits and its ability to stay ahead in mobile-phone chip technology. The deal would have $60 in cash and remainder of its shares. Back in November, Broadcom had made an offer of $70 per share. No time has yet been agreed for the two sides to meet.

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