In the previous article, we explored what we thought was possibly going to be the biggest tech deal yet… However, Qualcomm have rejected the $130 billion offer, dubbing the unsolicited buyout bid as ‘undervaluing’.
Not quite as ‘compelling’ as they initially thought, Broadcom’s offer, though record setting, was rejected. A unanimous decision by Qualcomm’s board of directors expressed the belief that not only does the offer ‘dramatically undervalue’ the company, but moreover, ‘comes with significant regulatory uncertainty’.
Qualcomm’s leaders believe that the company is in an advantageous position to ‘lead the transition to 5G’ – which, provided Qualcomm can square away its legal dispute with Apple and maintain dominance over the Android processor market – is true. After thorough investigation of the spontaneous offer, Qualcomm believe that they could add more value for their shareholders by continuing to execute their existing strategy.
But is this ‘relationchip’ tale over yet? The note about ‘dramatically undervaluing’ Qualcomm does give a hint that their board may be more receptive to higher offers from Broadcom, should any be forthcoming.
Before the offer was rejected, there were numerous speculations circling, one of which said that Broadcom appeared ready to fight any resistance. Reuters sources added, Broadcom is hoping to submit its own selection of directors for Qualcomm’s board. If shareholders want a deal, they could vote for new board members and force the company to come to the negotiating table.
Ultimately, was it really that shocking that Qualcomm rejected the offer? After all, it knows that it has plenty of bargaining chips. Its Snapdragon processors are virtually ubiquitous in the smartphone world, and it has lots of clout in wireless infrastructure as well. Qualcomm may not completely object to the idea of a sale, but it knows it can at least take a stab in the dark and hope for a better deal before losing its independence.