Qualcomm on Friday issued an official response to Broadcom in regards to the contents of their Wednesday meeting that saw them discuss the Singapore-based technology giant's revised bid for the chipmaker. In an open letter addressed to the unsolicited suitor, Qualcomm Chairman Paul E. Jacobs acknowledged Broadcom agreed to some additional concessions in regards to a number of antitrust concerns raised by the offer but concluded those won't be enough to eliminate a significant portion of regulatory uncertainty surrounding the deal. Likewise, the breakup fee Broadcom previously described as "generous" as part of its historic bid for the San Diego, California-based firm "does not come close to compensating" for the major risks of agreeing to the transaction, Mr. Jacobs said.
Outside of the scope of antitrust issues, Qualcomm's board reiterated its unanimous stance that Broadcom's $121 billion bid materially undervalues its assets, much like the original offer which was 24-percent lower. The bidder also insisted on controlling Qualcomm's licensing business during the period between signing the merger agreement and the theoretical conclusion of the consolidation, which the chipmaker deemed "problematic" and illegal under relevant antitrust laws. While questioned about its plans for the future of Qualcomm's valuable licensing business during the Wednesday meeting, Broadcom refused to disclose any information, which the approached party described as an obstacle to its efforts to predict potential antitrust issues and their remedies. The suitor agreed to unspecified divestitures meant to convince regulators around the world to approve the theoretical merger but also refused many others, according to Qualcomm, with the chipmaker concluding the proposal remains "unacceptable" on multiple levels.
Mr. Jacobs said the board remains fully committed to fulfilling its fiduciary duty, i.e. maximizing shareholder value for Qualcomm investors, which is why it remains open to further discussing the matter with Broadcom but is also convinced it can achieve better near- and long-term value on its own should Broadcom be unwilling to improve its offer and agree to additional concessions meant to increase the chances of the merger being approved. Broadcom has yet to respond to the matter and is still moving toward attempting a coup of Qualcomm's board at its annual shareholder meeting scheduled to take place on March 6. Should it be unsuccessful in installing its own directors, the current offer of $82 per Qualcomm share will expire following that date.