"It is the Board's unanimous belief that Broadcom proposal significantly undervalues Qualcomm relative to the Company's leadership position in mobile technology and our future growth prospects", said Paul Jacobs, Executive Chairman and Chairman of the Board of Qualcomm Incorporated.
Broadcom made an unsolicited bid last week to buy Qualcomm in an effort to become the dominant supplier of chips used in the 1.5 billion or so smartphones expected to be sold around the world this year. "We continue to believe our proposal represents the most attractive, value-enhancing alternative available to Qualcomm stockholders and we are encouraged by their reaction". A combination with Broadcom would not have propelled it past industry leaders Intel and Samsung.
Broadcom said it would seek to engage with Qualcomm's board and management, adding that it had received positive feedback from key customers and stockholders.
However, Qualcomm is likely to dig in for a lengthy siege.
Regulators are already scrutinizing Qualcomm's $38-billion acquisition of automotive chipmaker NXP Semiconductors NV. Tan said his offer for Qualcomm stands with or without Qualcomm's acquisition of NXP.More news: United Kingdom foreign secretary to meet husband of British woman jailed in Iran
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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". The company touted a string of deals signed with customers in China - the source of many of its woes in recent years; as well as the commercial shipment of its first server processor, created to open up new markets in data centers and cloud platforms; and the promise of a...
Broadcom CEO Hock Tan, who said earlier this month he would redomicile his company to the United States from Singapore, has stated he is open to launching a takeover battle.
This is just a minor hiccup for Broadcom, which is expecting to now escalate a proxy battle by appealing directly to Qualcomm shareholders. Another tactic Broadcom could use is to nominate directors for Qualcomm's board ahead of the company's annual general meeting in 2018.
Information for this article was contributed by Tiffany Hsu of The New York Times.