Some Investors Pressuring Qualcomm To Haggle With Broadcom

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Some investors already started publicly pressuring Qualcomm’s Board of Directors to haggle with Broadcom over its unsolicited and rejected bid to acquire the San Diego, California-based chip giant, Bloomberg reported on Monday, citing Artisan Global Value Fund manager Daniel O’Keefe. The administrator of the multi-billion dollar fund said that the investment group is “very interested in evaluating an offer that begins with an eight,” marking the first time that one of Qualcomm’s larger shareholders publicly signaled they’re prepared to negotiate the price with Broadcom.

The initial offer amounted to a historic sum of $130 billion including $25 billion in debt, ultimately amounting to $70 per share, $60 of which would be paid in cash, with the rest being planned to be given as stock of the combined entity. With Qualcomm’s stock currently trading at north of $66, Mr. O’Keefe’s comments about an offer of $80 per share being something worth considering indicate that at least some investors aren’t too far away from negotiating with Broadcom even without the board’s involvement or blessing. On the other hand, the vast majority of stakeholders remain sided with the propositioned chipmaker for the time being and Broadcom Chief Executive Officer Hock Tan has a reputation of an aggressive dealmaker who rarely overpays for his purchases, with his three largest tech acquisitions to date amounting to no more than 6.8 percent of the initial offer.

While Mr. O’Keefe’s remarks are far from binding for either Qualcomm or Broadcom, they may mark the start of a proxy takeover war that some industry watchers predicted as soon as the original bid was rejected by the approached company for being too low and uncertain in the context of major regulatory scrutiny that it was likely to attract in all parts of the world. Broadcom later said it hasn’t given up on the deal, though the multinational chipmaker has yet to reapproach Qualcomm with an improved offer and the U.S. firm made no indication of being willing to haggle. If completed, the transaction would become by far the largest acquisition in the history of the technology industry, with the current record-holder being Dell with its $67 billion purchase of EMC in 2015.