Broadcom raises bid for Qualcomm in 'final offer'

Monday 5 February 2018 | 13:28 CET | News

Broadcom has improved its takeover offer for Qualcomm to USD 82 per share from USD 70, as well as promising a bigger share of cash if the deal does not close within one year. The company also added a large termination fee if the merger is unable to secure regulatory approval.

The new offer is worth USD 60 in cash and the remainder in shares, the same split as its original offer in November. Broadcom said this is its "best and final offer" for Qualcomm, which has so far rejected any talks on the deal. 

The new bid is a 50 percent premium on Qualcomm's share price the day before reports first emerged of an offer and also 24 percent higher than Qualcomm's recent share price of around USD 66. Broadcom noted that Qualcomm's shares have traded over USD 82 only three days in the company's more than 26 years listed on the stock market. 

The new offer includes a 'ticking fee' providing for an increase in the cash consideration payable to Qualcomm stockholders if the transaction is not completed by the one-year anniversary of entering into a definitive agreement. Broadcom said it is also prepared to pay to Qualcomm a "significant" reverse termination fee in an "amount appropriate for a transaction of this size" if it is unable to obtain the required regulatory approvals. To appease regulators, Broadcom said it would agree to provisions "at least as favorable as" those provided by Qualcomm in its proposed takeover of NXP. 

Broadcom reiterated that it would not withdraw its offer if Qualcomm decides to terminate the planned acquisition of NXP Semiconductors. Qualcomm has been waiting over a year for regulatory approval of the NXP deal and its tender offer has been accepted by just a handful of NXP shareholders. 

Broadcom's improved offer was accompanied by a presentation outlining its successful record in closing and integrating acquisitions. The presentation also underlines the fair value of its offer and points to failings in Qualcomm's current strategy and future business plan

Broadcom is proposing its own slate of directors at Qualcomm's AGM on 06 March. Its new offer is conditional on Qualcomm not cancelling or delaying the shareholders meeting. Broadcom said it's also open to two existing directors at Qualcomm, executive chairman Paul Jacobs and one other, to remain on the board. 

Qualcomm said its board would review the new offer. The company rejected Broadcom's last offer as it "dramatically undervalued" the company and also carried significant regulatory uncertainty. 

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