Qualcomm’s board unanimously rejected Broadcom’s offer to acquire the chipmaker for around $121 billion early this month. The San Diego-based mobile chipmaker said the offer materially undervalues the company. The executives of both the companies met on February 14 to discuss the deal, which then led to Broadcom lowering its offer.
In a twist to this ongoing negotiation saga, Qualcomm has changed its stance, and says it will consider Broadcom’s takeover bid at valuation of $160 billion. Financial Times reports that the valuation also includes $25 billion in assumed debt. This is the first time that Qualcomm has shown intent for its takeover by Broadcom after its board unanimously rejected the offer twice.
Broadcom has been hard at work to acquire Qualcomm, and has even created a hostile takeover bid with its own board. Qualcomm shareholders are expected to decide whether they should replace the existing board with one proposed by Broadcom. The merger between two companies would lead to one of the biggest technology deals in the semiconductor industry. The takeover has been complicated further by Qualcomm’s acquisition of NXP Semiconductors.
Broadcom had initially offer $70 a share to acquire Qualcomm, and then raised it to $82 in a hostile takeover bid after the San Diego-based company rejected the first bid. Qualcomm is currently trading at around $67 on NASDAQ, and is asking Broadcom to offer $90 a share, around 35 percent premium over its current price.
Meanwhile, Reuters reports that a national security panel has started looking into the takeover offer. CFIUS, an opaque inter-agency panel has the authority to block the deal citing US security reasons. It is simple that Broadcom’s interest in Qualcomm comes at a price and a lot of scrutiny. It needs to be seen whether Broadcom offers that price, and most importantly whether regulators approve the merger.