Chip maker Qualcomm rejects $130 bn Broadcom merger bid

Qualcomm will reportedly turn down Broadcom's $100 billion offer

Last week, Broadcom made national news by offering Qualcomm $130 billion to acquire the company.

In a statement released today, Qualcomm's board say the offer "significantly undervalues" the company.

In an email, a Qualcomm spokesperson said the company "won't have any comment beyond this statement". "We are confident in our ability to create significant additional value for our stockholders as we continue our growth in these attractive segments and lead the transition to 5G (mobile technology)".

Qualcomm also said the offer poses "significant regulatory uncertainty" for the firm, adding that strategy being executed by Mollenkopf is "far superior" in value to its stockholders than the proposed offer.

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Broadcom's proposal came days after its CEO Hock Tan appeared at the White House with President Donald Trump to announce plans to move the tech company back to the United States from Singapore.

As we said when the proposal was announced, it's likely that Broadcom also smelled blood in the water, because Qualcomm is now fighting a battle on multiple fronts, what with the ongoing dispute with Apple, the Federal Trade Commission (FTC) investigation, and other conflicts.

Broadcom said there are "compelling financial benefits" to such a deal and Qualcomm's portfolio and global market reach would be complementary to Broadcom's business. Sources told Reuters that prior to Qualcomm's official rejection, Broadcom was already considering a larger bid. Regulators are already scrutinizing Qualcomm's $38-billion acquisition of automotive chipmaker NXP Semiconductors NV. If Broadcom makes a hostile bid, Qualcomm's governance rules would allow the rival to submit its own slate for the entire 11-member board by the December 8 nomination deadline. Qualcomm is already at the front of the pack when it comes to mobile chipmaking, and it stands to make a lot of money from that position as carriers begin to roll out 5G networks.

Shares of Qualcomm were up 1.8 percent at $65.74 in early afternoon trading, while those of Broadcom were down 0.4 percent at $263.95.

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