Broadcom really wants to buy Qualcomm and merge the two chip giants into one company that would be a major force in the communications market. Broadcom had put forward an offer that valued Qualcomm at $120 billion yesterday and many thought that the company's board would find the offer hard to refuse. However, the Qualcomm board was unanimous in rejecting the $120 billion offer.
Qualcomm's board sent Broadcom a letter outlining the reasons why it noped out of the deal, writing, "Broadcom proposal materially undervalues Qualcomm and falls well short of the firm regulatory commitment the Board would demand given the significant downside risk of a failed transaction. " The decline on the $120 billion does have a silver lining for Broadcom, the Qualcomm board has offered to meet "to see if it can address the serious deficiencies in value and certainty in its proposal."
The two main points of contention for Qualcomm that it demands to be answered in any meeting include what is the highest price Broadcom would pay per share. Qualcomm also wants some commitments from Broadcom that will "ensure" the proposed transaction passes regulatory scrutiny and closes without incident.
This isn’t the first rejection Broadcom has faced on its path to buying Qualcomm. Late last year, Qualcomm's board again unanimously rejected Broadcom's first offer, which was valued at just over $100 billion.