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Broadcom takes its $103-bn bid hostile by nominating 11 for Qualcomm board

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05 December 2017

Chipmaker Broadcom Ltd has made its first move towards taking its $103-billion unsolicited takeover bid hostile for rival Qualcomm Inc by naming its 11 nominees it wants to put on the board of the semiconductor firm.

Shareholders of Qualcomm will vote for or against the Broadcom nominees at the company's annual meeting on 6 March.

Last week Qualcomm rejected Broadcom's $103-billion unsolicited takeover bid, saying that the offer undervalued the company and that the deal would face regulatory hurdles.

Broadcom had offered to pay $60 per share in cash and $10 per share of its own stock, a 28-per cent premium over the closing price of Qualcomm's common stock on 2 November, the last unaffected trading day prior to media speculation regarding a potential transaction.

Qualcomm said that it believes that the latest action by Broadcom is a blatant attempt to seize control of the company's board in order to advance Broadcom's acquisition agenda.

''These nominees are inherently conflicted given Broadcom's desire to acquire Qualcomm in a manner that dramatically undervalues Qualcomm to Broadcom's benefit,'' it said in a statement.

''No company in the industry is better positioned than Qualcomm in mobile, IoT, automotive, edge computing and networking and to lead the transition to 5G,'' said Tom Horton, Qualcomm's presiding director. ''Qualcomm stockholders expect a Board that will support this innovation while evaluating objectively the full range of opportunities available to maximize value for all Qualcomm stockholders.''

On 13 November, Qualcomm's board unanimously rejected Broadcom's non-binding, unsolicited bid saying that the proposal dramatically undervalued Qualcomm and comes with significant regulatory uncertainty, and therefore is not in the best interests of Qualcomm stockholders.

Qualcomm provides chips to carrier networks to deliver broadband and mobile data, and is currently working on chips for mobile and transition to 5G networks.

It is currently engaged in a patent infringement dispute with Apple Inc, and is also trying to close its $38-billion acquisition of automotive chipmaker NXP Semiconductors NV after signing a deal in October 2016.

Broadcom has indicated it is willing to acquire Qualcomm irrespective of whether it closes the NXP deal.

NXP shares have been trading above Qualcomm's offer price, as many NXP shareholders, including hedge fund Elliott Management Corp, have been holding out for a better price. Qualcomm does not plan to significantly raise its price for NXP as a defensive strategy to make any attempt at being acquired by Broadcom more expensive, according to media reports.

Broadcom, created in 2016 when Avago Technologies Ltd acquired Broadcom Corp for $37 billion, has built itself from a former Hewlett Packard division into one of the largest chipmakers via a string of purchases.

Broadcom, which counts Apple Inc among its largest customers, is among the five largest chip manufacturers and has an annual turnover of $13.24 billion.

Its product portfolio serves multiple applications within four primary end markets: wired infrastructure, wireless communications, enterprise storage and industrial & others.

Applications for its products in these end markets include data center networking, home connectivity, broadband access, telecommunications equipment, smartphones and base stations, data center servers and storage, factory automation, power generation and alternative energy systems, and displays.





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