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.
Qualcomm said that, after a comprehensive review of the offer, its board unanimously concluded that the $70-a-share proposition "significantly undervalues" the chipmaker giant.
Qualcomm CEO Steve Mollenkopf added that the U.S. chip maker has a future in mobile, the Internet of Things (IoT), edge computing and networking within the semiconductor industry, and the firm has no doubt of future growth in these areas.
After getting an on-the-record rejection of its buyout bid for Qualcomm (NASDAQ:QCOM), Broadcom (NASDAQ:AVGO) says it's still "fully committed" to the deal.
That would allow Qualcomm shareholders to vote to replace the company's board and force it to engage with Broadcom.
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"We continue to believe our proposal represents the most attractive, value-enhancing alternative available to Qualcomm stockholders and we are encouraged by their reaction", the company said.
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.
It's not clear how Broadcom will respond. Broadcom is reportedly prepared to up its offer somewhat from its current level, although it's unclear how much higher they might be willing to go.
At the time of writing, Qualcomm shares are priced at $65.50 pre-market.
The combined revenue of the three firms in question - Qualcomm, Broadcom and NXP - is expected to touch $51 billion in FY 2017 with EBIDTA of aroud $23 billion, forecasts the semiconductor fiem, justifying its proposal.
Shares of Qualcomm have been declining in value in the recent quarters, which is why Broadcom made its proposal.