In one of the most hostile takeover bids in recent times, Broadcom has sent a revised offer of $150 billion to acquire Qualcomm. The earlier offer was valued at $130 billion at $60 per Qualcomm share in cash and $10 for each Broadcom share. However, in the revised offer Broadcom has kept the cash offer intact but increased its share offering to $22, making the total value as $82 per share.
Along with the new offer Broadcom has also offered to take two of Qualcomm’s directors on its board. It, specifically, has asked Qualcomm Chairman Paul Jacobs to join the combined board.
It can be recalled that in November 2017 Broadcom had sent Qualcomm an acquisition offer of $130 billion which was unanimously rejected the Qualcomm board. It was expected that the offer would be revised. Even Paul Jacobs appeared to have hinted at a better offer as he had said the first offer undervalues Qualcomm.
After the rejection, Broadcom has sweetened the offer in many aspects.
The new offer is 50% higher to Qualcomm’s share price on November 2, 2017, or when the first offer was made and 24% higher than its recent share price of $66.
The new bid also includes a ‘ticking fee’ that offers an increase in cash consideration payable to Qualcomm if the transaction is not completed withinn a year of signing the agreement. Besides, the semiconductor firm alsso said t is ready to pay a reverse termination fee if the deal failes to get the required regulatory approvals.
Qualcomm on Monday admitted of receiving such an offer from the other semiconductor firm.
“This proposal to acquire Qualcomm is extremely compelling compared to any other alternative available to Qualcomm, with or without the acquisition of NXP, and we believe any responsible board would engage with us, without further delay, to turn this proposal into an executed definitive agreement. We continue to hope you choose to engage with us for the benefit of your stockholders. However, we will withdraw this proposal and cease our pursuit of Qualcomm immediately following your upcoming annual meeting unless we have entered into a definitive agreement or the Broadcom-nominated slate is elected,” Broadcom CEO Hock Tan wrote in a letter to Qualcomm.
Broadcom says its offer to takeover Qualcomm is irrespective of the later’s acquisition of NXP.