Broadcom Pressures Qualcomm to Negotiate After Raising Bid


Broadcom Ltd. offered Qualcomm Inc.’s shareholders a $16 billion-bigger payday, ratcheting up the pressure on its rival chipmaker to negotiate while deriding Qualcomm’s plan for independence as “pie in the sky.”

“Any rational board would engage with us,” Broadcom Chief Executive Officer Hock Tan said in an interview. “It’s an offer that provides more value to the shareholders of Qualcomm than any standalone value that Qualcomm has tried, or may think they can try to create.”

Broadcom early Monday raised its bid for Qualcomm to about $121 billion in an attempt to force what could be the largest-ever technology deal. The new offer of $82 a share is 17 percent higher than an opening proposal in November that was rejected. It’s the “best and final” proposal, Broadcom said.

Tan is raising the stakes for Qualcomm Chief Executive Officer Steve Mollenkopf to come talk or face a March shareholder vote that could oust his board. Investors contacted by Bloomberg at the time of the initial bid said they would need more than $80 a share to side with Broadcom. Qualcomm said Monday it had received Broadcom’s revised proposal and would review the offer before responding.

Mollenkopf dismissed the earlier bid as not even warranting consideration and his team has avoided responding to outreach, according to Tan. The two men disagree on the future of the industry and have opposite views on how a semiconductor company should be run. Broadcom believes the boom years are over and expensive spending to get into new areas is a waste of shareholder money. Qualcomm’s leaders argue that a new growth surge is just around the corner.

The proposed combination would cap more than two years of consolidation in the semiconductor industry and create the world’s third-largest chipmaker, with products in almost all smartphones.

Photographer: Patrick T. Fallon/Bloomberg

Qualcomm has argued that regulators would be unlikely to quickly, if ever, approve such a combination. Tan has said he’s already identified two minor businesses that overlap and assured regulators that he’d spin them off to speed approval. Broadcom also has started regulatory approval processes in the U.S., China and the European Union, the company’s antitrust lawyer Daniel Wall, of Latham & Watkins, said Monday.

Tan said he’s prepared to offer a breakup fee that would be in the multiple-billions of dollars and at the high end of the range typically offered in such circumstances. He’ll also offer shareholders payments that increase with time if regulatory approval takes longer than the year he’s forecasting, something that will give Broadcom an incentive to get it done quickly.

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