Qualcomm said that the regulatory risks related to a merger with Broadcom would be too high and leave the companies in limbo. However, Qualcomm did encourage further discussions.
Broadcom and Qualcomm executives met Wednesday to discuss the former's $82 a share best and final offer. Broadcom has been pursuing an acquisition of Qualcomm, which is trying to close the purchase of NXP.
In a letter to Broadcom CEO Hock Tan, Qualcomm Chairman Paul Jacobs said the $82 per share bid still undervalues his company. He noted:
Our Board found the meeting to be constructive in that the Broadcom representatives expressed a willingness to agree to certain potential antitrust-related divestitures beyond those contained in your publicly filed merger agreement. At the same time, Broadcom continued to resist agreeing to other commitments that could be expected to be required by the FTC, the European Commission, MOFCOM and other government regulatory bodies. Broadcom also declined to respond to any questions about its intentions for the future of Qualcomm's licensing business, which makes it very difficult to predict the antitrust-related remedies that might be required. In addition, Broadcom insists on controlling all material decisions regarding our valuable licensing business during the extended period between signing and a potential closing, which would be problematic and not permitted under antitrust laws.
Broadcom tried to allay regulatory concerns by raising a breakup fee, but Qualcomm said a limbo state would be bad for the company.
Our Board is highly cognizant of the need to protect Qualcomm's stockholders from the considerable risks of agreeing to a transaction that does not close. A breakup fee in the range proposed by Broadcom does not come close to compensating for those risks.
While the current Broadcom proposal is unacceptable, our Board is intensely focused on maximizing value for Qualcomm stockholders, whether through executing on its growth strategy or by selling the Company. Our Board is open to further discussions with Broadcom to see if a proposal that appropriately reflects the true value of Qualcomm shares, and ensures an appropriate level of deal certainty, can be obtained.