Qualcomm, Broadcom meet on takeover bid

NEW YORK • Qualcomm said on Wednesday it met Broadcom to discuss the latter's revised US$121 billion (S$160 billion) bid, the first time the chipmakers have discussed what would be the technology sector's largest-ever acquisition.

The outcome of the meeting will determine whether Qualcomm will engage in negotiations or continue to defend itself by rallying its shareholders, who are scheduled to vote on March 6 on replacing the majority of its board with Broadcom nominees.

Neither side commented on what transpired in the two-hour meeting. Qualcomm said in its statement its board would meet to determine its next steps. Broadcom's top executives left the meeting with the impression that their Qualcomm counterparts listened to them but did not engage, according to sources familiar with the matter.

The meeting came after Qualcomm rejected Broadcom's revised cash-and-stock bid of US$82 per share and said the new offer still undervalued it and fell well short of the firm commitments on regulatory issues it expected.

Qualcomm had said it would take the meeting to allow Broadcom to explain how it would attempt to bridge the gaps in both value and deal certainty and to better understand the issues that remained unaddressed in its proposal.

Qualcomm had said Broadcom's plan to address antitrust concerns by selling two Qualcomm businesses, its Wi-Fi networking processors and RF Front End chips for mobile phones, was inadequate to allay concerns that the deal would not win regulatory approval.

The takeover battle is at the heart of a race to consolidate the wireless technology equipment sector, as smartphone makers use their market dominance to negotiate down chip prices.

Qualcomm has argued that signing a deal with Broadcom could create uncertainty with its customers during the time it takes to complete the deal. Broadcom has promised to pay a breakup fee of US$8 billion in the event regulators thwart the deal, as well as a "ticking" fee of 6 per cent per year on the cash portion of the consideration if the deal takes more than 12 months to close.

REUTERS

A version of this article appeared in the print edition of The Straits Times on February 16, 2018, with the headline 'Qualcomm, Broadcom meet on takeover bid'. Print Edition | Subscribe