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Qualcomm's Board Unanimously Rejects Broadcom Offer

14 November 2017

This is just a minor hiccup for Broadcom, which is expecting to now escalate a proxy battle by appealing directly to Qualcomm shareholders.

Due to several reasons, Qualcomm has rejected Broadcom's $130 billion offer and will continue to operate as a separate entity for now.

Qualcomm shares rose 0.8 percent, to $65.11, while Broadcom was off by 1 percent, at $262.24 a share, after the rejection announcement. According to a press release from Qualcomm, its board of directors unanimously vetoed the purchase.

"Broadcom's proposal significantly undervalues Qualcomm relative to the company's leadership position in mobile technology and our future growth prospects", Jacobs said.

USA chipmaker Qualcomm Inc (QCOM.O) is making preparations to reject rival Broadcom Ltd's (AVGO.O) $103 billion bid as early as this week, four people familiar with the matter said on Sunday, setting the stage for one of the biggest-ever takeover battles.

On a more positive note, Canaccord Genuity's Mike Walkley, reiterating a Buy rating on Qualcomm, raises his price target to $83 from $76, writing that he thinks Broadcom will bid higher.

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Reuters, citing sources, reported Qualcomm's CEO felt the Broadcom unsolicited takeover offer "undervalues the company and does not price in the uncertainty associated with getting the deal approved by regulators".

Steve Mollenkopf, Qualcomm's chief executive, said the California company remains confident about its future.

Both semiconductor companies did not immediately respond to requests for comment.

Singapore-based Broadcom made the offer last week in what would have consolidated two major players in the booming sector fueled by growth in smartphones and other connected devices. It is involved in a patent infringement clash with Apple Inc. and is also raising efforts to close its $38 billion acquisition of automotive chipmaker NXP Semiconductors NV after ratifying a deal in October 2016.

Qualcomm delivers chips to carrier networks to provide broadband and mobile data.

On Friday, Qualcomm shares concluded at $64.57, while Broadcom finished at $264.96.

Qualcomm's Board Unanimously Rejects Broadcom Offer