Qualcomm softens stance on merger bid by Broadcom ahead of board meeting

Broadcom’s unsolicited bid to buy rival Qualcomm has been plagued with uncertainties ever since the proposal was made. The deal is being closely watched by the industry, for the offer amount is touted as the biggest ever in the tech sector. After rejecting the offer repeatedly, Qualcomm has finally eased its stance and asked Broadcom to engage in a direct discussion with it, clearing the hurdles for one of the most fiercely fought acquisitions to become a reality. It was widely expected that the Qualcomm chiefs would budge ahead of the March-6 board meeting.

The positive response from Qualcomm came after the companies reached a consensus on various fronts, including regulatory issues, at the first ever meeting called by them last week to discuss the proposal. According to Qualcomm, all the offers made by Broadcom, including the final price of $117 billion, undervalued the company.

The price was revised several times after Broadcom initiated the hostile offer in November last year to purchase the assets of Qualcomm for $103 billion in a cash and stock deal.

If completed, the merger will result in the creation of an all-in-one semiconductor conglomerate capable of developing cell phone chips to electric vehicles. All along, Broadcom has stipulated the successful completion of Qualcomm’s own acquisition of NXP Semiconductors as a condition for its offer.

The letter sent by Qualcomm, calling for mutual due diligence, assumes significance considering the complexity of the matter. What is intriguing is the timing of the letter as it was sent ahead of the upcoming board meeting of Qualcomm, at which shareholders will be electing a new team of board members. Most importantly, it will be decided at the meeting whether to hand control to the six nominees recommended by Broadcom.

In a dramatic turn of events, Broadcom reduced the offer price by 4% to $117 billion last week, after Qualcomm failed to raise its offer for NXP Semiconductors.