Qualcomm Merger With Broadcom was one of the biggest and surprising news in the chip industry. You might want to know what’s going on in this acquisition process. Well, it is reported that Qualcomm’s board of directors unanimously rejected the Broadcom’s bid of 82 US dollars per share, Broadcom further improves the bidding offer. Broadcom is willing to pay Qualcomm $8 billion as “termination fee” if the deal fails to get the regulatory approval.
Broadcom CEO Hock Tan (Chen Fuyang) disclosed a letter this Friday to Qualcomm chairman Paul Jacobs. Although Chen Fuyang reiterated that the bid of $82 per share is the “best final offer”, he also said that he could modify the merger proposal to add an additional 8 billion US dollar in termination fees and a 6% annual regulatory waiting fee for the cash portion of the considered Dividends). The $8 billion termination fee accounts for about 6.6% of the $121 billion in total transactions.
Qualcomm dismissed Broadcom’s first offer last year, arguing that the price offered by Broadcom has underestimated the company’s value. A key crux of the deal is whether Chen Fuyang can persuade Qualcomm’s board of directors to convince them that the merger will win regulators’ approval.
However, Broadcom said the latest proposal is very beneficial to Qualcomm and its shareholders. Chen Fuyang said he looks forward to it “immediately” and Qualcomm to discuss the merger, and proposed the earliest meeting this weekend.
Qualcomm warned on Friday that it could lose two customers if it accepts Broadcom’s $ 121 billion takeover offer. Qualcomm also said the deal cannot get regulatory approval.
Qualcomm said customers offering more than $1 billion in chips have already said they would abandon Qualcomm if the transaction was completed because they did not believe Broadcom would be able to continue leading the technology.
Qualcomm is an important player in chip industry as Apple, Samsung, Huawei, LG, OPPO, Sony, vivo and Xiaomi are the main customers of Qualcomm, most of them being smartphones manufacturers.
Qualcomm while dismissing the Broadcom acquisition proposal said that it would be willing to meet with the opponent to see whether the disagreement can be resolved. Broadcom has welcomed this but wants to meet Qualcomm before Monday. Qualcomm will be holding a meeting with its acting consultant before Tuesday. As of Friday morning, the date of the meeting between the two sides has not yet been finalized.
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Qualcomm also raised antitrust issues that it may face while arguing that Broadcom will hurt its authorized business of $4 billion. Broadcom is completely ignoring the reality that, in the past five years, it took more than 18 months to finalize the merger process involving bigger and international companies and multiple regulators.