$130 billion isn't enough for Broadcom to take over Qualcomm
Nov 14 2017
Another tactic Broadcom could use is to nominate directors for Qualcomm's board ahead of the company's annual general meeting in 2018.
"Broadcom's $70 bid and Qualcomm's rejection as a positive indicator that Qualcomm's licensing business remains undervalued and both companies believe Qualcomm can resolve its licensing issues with Apple and another leading OEM", writes Walkley.
Last week, Broadcom made an unsolicited offer to buy Qualcomm, one of the biggest SoC and cellular modem manufacturers for smartphones.
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 awesome arrangement of items and advancements. Apparently, it is considering raising its bid, but also wants to submit its own selection of directors for Qualcomm's board.
"Our proposal provides Qualcomm stockholders with a substantial and immediate premium in cash for their shares, as well as the opportunity to participate in the upside potential of the combined company", said Hock Tan, President and Chief Executive Officer of Broadcom at the time.
NXP shares have been trading above Qualcomm's offer price, as many NXP shareholders, including hedge fund Elliott Management Corp, have been holding out for a better price. Broadcom has told analysts and investors it could chop $3 billion from Qualcomm's expenses, boosting operating profit by about 30%. "A properly-timed raise to the price (perhaps coincident with more aggressive moves) might easily be plausible". "We believe Broadcom is likely to increase its bid, contributing to our increased price target". It said its dominance of the mobile processors market and future growth prospects mean it is unable to accept Broadcom's valuation.
On Monday, Qualcomm's (qcom) shares were up to nearly $66, though still below the $70 bid.
This could lead to a higher bid from Broadcom in the future, but there's no word on when Broadcom might make another offer.