Qualcomm rejects Broadcom's record-breaking $105 billion takeover attempt (AVGO, QCOM)

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To recap, the $130 billion dollar deal would put Qualcomm's share value at $70, which is higher than what it was being valued for initially. Given Broadcom's initial bid for Qualcomm combined with Qualcomm's Board of Directors rejecting the bid, we believe our base case scenario of $6.90 in C2019 pro-forma earnings (with NXP, with royalties from Huawei, and assuming Apple settles at a 50% discount to previous iPhone royalties) is a realistic outcome.

Hawk Tan, the Chief Executive at Broadcom, said in an announcement that this integral exchange will put the joined undertaking as a pioneer in the worldwide correspondence advertises with an fantastic arrangement of items and advancements.

He added: "No company is better positioned in mobile, IoT, automotive, edge computing and networking within the semiconductor industry". "Qualcomm's "thanks, but no thanks" response to the unsolicited bid by Broadcom isn't surprising and we would be surprised if at this point, Broadcom didn't move forward with a proxy fight", Loop Capital analyst Betsy Van Hees told Reuters.

Beyond that, Qualcomm CEO Steve Mollenkopf said today he and the board of directors believe that the company can further create value for shareholders with the upcoming transition to 5G. Qualcomm and Broadcom did not immediately respond to requests for comment.

Qualcomm has a message for its prospective buyer: Sorry, but we're worth more than you think. Qualcomm does not plan to considerably increase its price for NXP as a defensive strategy to make its acquisition by Broadcom more costly, one of the sourced said. Samsung and Apple are the only two smartphone OEMs who have a choice to not use Qualcomm technology because they both make their own chips. Broadcom's (avgo) shares, up nearly 50% so far this year, were largely unchanged on Monday at $264.28. After a comprehensive review, conducted in consultation with our financial and legal advisors, the Board has concluded that Broadcom's proposal dramatically undervalues Qualcomm and comes with significant regulatory uncertainty.

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