An extra $10 per share could be what it takes to convince Qualcomm to change its tune about an unsolicited takeover bid by Broadcom, Bloomberg reported.
Qualcomm recently rebuffed Broadcom’s $70 per share offer, claiming the $130 billion offer “dramatically undervalued” the company. But Bloomberg noted Qualcomm investors could be enticed by an offer of at least $80 per share.
After Qualcomm’s rejection, Broadcom vowed to press ahead with its bid, noting a desire to “engage cooperatively” with Qualcomm’s board of directors.
David Rolfe, CIO at Wedgewood Partners, a company which invests in Qualcomm stock, told Bloomberg investors are indeed expecting another volley, but said any offer must be “at least in the $80 handle” to gain enough shareholder support.
Broadcom’s pursuit comes as Qualcomm battles its way through several challenges, including an ongoing patent war with Apple and regulatory challenges to its licensing business. These factors have already wounded Qualcomm, as fiscal Q4 (calendar Q3) profit plunged nearly 90 per cent year-on-year.
Even as investors get nervous, Qualcomm is holding the line: in a statement rejecting Broadcom’s bid, Qualcomm executive chairman Paul Jacobs insisted the company retains a “leadership position in mobile technology” and strong prospects for future growth.
Not everyone would be happy about a tie up between Qualcomm and Broadcom, no matter what price the latter lays on the table. Several analysts told Mobile World Live a tie up between the two companies would face an uphill battle for regulatory approval and could kill innovation in the chip market.
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