Qualcomm has moved quickly to rejected rival Broadcom's $130bn takeover bid, claiming that it "dramatically undervalues" the company, but hinted that a significantly raised offer might be accepted.
Qualcomm announced late last night that its board of directors had "unanimously rejected" Broadcom's record-breaking offer, having agreed that the $70 per share bid "dramatically undervalues Qualcomm" and "comes with significant regulatory uncertainty".
In a statement, Paul Jacobs, executive chairman and chairman of the board of Qualcomm, said: "It is the board's unanimous belief that Broadcom's proposal significantly undervalues Qualcomm relative to the company's leadership position in mobile technology and our future growth prospects."
The company's CEO, Steve Mollenkopf, added that "no company is better positioned in mobile, IoT, automotive, edge computing and networking within the semiconductor industry."
He continued: "We are confident in our ability to create significant additional value for our stockholders as we continue our growth in these attractive segments and lead the transition to 5G."
In response to Qualcomm's rejection, Broadcom has said it will look to engage with the chipmaker's board and management, adding that it had received positive feedback from key customers and stockholders.
"We continue to believe our proposal represents the most attractive, value-enhancing alternative available to Qualcomm stockholders and we are encouraged by their reaction," Broadcom CEO Hock Tan said.
"Many have expressed to us their desire that Qualcomm meet with us to discuss our proposal," he added.
According to Reuters, Broadcom could increase its offer to up to $90 per share. Indeed, insiders had suggested that the company had considered offering as much as $80 per share in its opening bid - implying that it has room and resources to dramatically raise its offer.
This comes after the FT last week reported that Broadcom's current $70 per share offer was far from anything Qualcomm's board would consider seriously, with the firm viewing the bid as "opportunistic" because of the fact that it's price has recently fallen due to its ongoing legal skirmish with Apple.
This battle began when Apple sued Qualcomm for $1bn and halted royalty payments to the company over complaints that Qualcomm was 'overcharging billions' for technologies that they had nothing to do with.
This lack of royalty payments is doing significant damage to Qualcomm's bottom line, as the chipmaker revealed earlier this month that its profits had dropped 90 per cent year-over-year.
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