US chipmaker Qualcomm Inc (QCOM.O) is making preparations to reject rival Broadcom Ltd's (AVGO.O) $103 billion bid as early as this week, four people familiar with the matter said on Sunday, setting the stage for one of the biggest-ever takeover battles. And that doesn't take into account ending Qualcomm's royalty rate feuds with Apple (aapl) and another unidentified phonemaker that are costing the company another $3 billion a year or more.
The company's decision to decline what would be the biggest-ever tech deal simply opens the door for the inevitable proxy battle that will ultimately decide the fate of the chipmaker.
"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".
Broadcom's response suggests "the potential of a fully-hostile bid, complete with proxy fight, could be building, with the nomination deadline for Qualcomm's board fast approaching".
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Keep in mind, this offer from Broadcom wasn't solicited, so it isn't as if Qualcomm and Broadcom were in talks about a merger before Broadcom plopped its $130 billion bid on the table.
This could lead to a higher bid from Broadcom in the future, but there's no word on when Broadcom might make another offer. Amid all the fighting with Apple, and accompanying loss of revenue, Qualcomm's shares had fallen 20% this year through late October to $51 before rumors of Broadcom's interest leaked.
Shares of Qualcomm rose as much as 2.5 percent to $66.17, while those of Broadcom fell as much as 1.3 percent to $261.55.
At the time of writing, Qualcomm shares are priced at $65.50 pre-market.
"No company is better positioned in mobile, IoT (internet of things) automotive, edge computing and networking within the semiconductor industry", Mollenkopf said, in Qualcomm's statement. They have forced Qualcomm to offer concessions, and may demand more.