Broadcom hikes bid price for Qualcomm, invites Paul Jacobs to board

Broadcom CEO Hock TanBroadcom CEO Hock Tan has increased the bid price to $145 billion from the earlier $130 billion to buy Qualcomm.

The revised offer will allow Qualcomm shareholders to hold some more share in Broadcom and gain in future years.

Broadcom said Qualcomm stockholders would receive $82 per each share including $60 in cash and the balance in Broadcom shares.

Broadcom’s previous $70 per share offer consisted of $60 per share in cash and $10 per share in stock.

The new bid is reaching the Qualcomm shareholders after the chipset company made no progress in improving its revenue in the December quarter. Qualcomm shareholders are expected to meet on March 6 to decide the fate of Qualcomm.

The improved offer, represents 50 percent premium over the closing price of Qualcomm stock on November 2, 2017.
Qualcomm is in declineBroadcom has also invited two Qualcomm directors, including Paul Jacobs, to join combined company’s board. Earlier, Broadcom tried to remove all directors from Qualcomm including its founders.

More Gains

# Broadcom willing to provide regulatory ticking fee and significant reverse termination fee
# Broadcom also willing to make strong regulatory commitments

Broadcom’s improved offer is premised on either Qualcomm acquiring NXP Semiconductors for $110 per share or the transaction being terminated and is also premised on Qualcomm not delaying or adjourning its annual meeting past March 6, 2018.

Meanwhile, Qualcomm is in the process of acquiring NXP Semiconductors for $38 billion. Qualcomm received the approval from European Union antitrust regulators last month, and is expecting okay from China later.

Reuters report that the NXP deal faces uncertain future as some of its shareholders, including activist hedge fund Elliott Management, have asked Qualcomm to raise its offer. Qualcomm is expected to make a decision later this month.
Qualcomm share price in historyBroadcom nominees for Qualcomm

Samih Elhage, former President of Nokia Mobile Networks, CFO & COO of Nokia Siemens Networks and Nokia Networks Former Board Member of Alcatel-Lucent, Alcatel Shanghai Bell and Quickplay Media

Raul Fernadez, vice chairman of Monumental Sports & Entertainment Former CEO of ObjectVideo, Dimension Data NA and Proxicom Board Member of AtSite and PerfectSense Former Board Member of Kate Spade

Michael Geltzeiler Former CFO & SVP of ADT Former CFO & EVP of NYSE Euronext

Stephen Girsky Former Vice Chairman of General Motors Board Member of US Steel, Brookfield, and Valens Former Board Member of Dana Holdings and General Motors Managing Partner of VectorIQ

David Golden Former Vice Chairman of TMT Banking at J.P. Morgan Board Member of Barnes & Noble Education Former Board Member of Blackbaud and Everyday Health Managing Partner of Revolution Ventures

Veronica Hagen Board Member of Newmont Mining, Southern Company and American WaterWorks Former CEO of Polymer and SappiFine Paper Former Board Member of AVINTIV, JacuzziBrands and Covanta

Julie Hill Board Member of Anthem & Trustee of Lord Abbett Family of Mutual Funds Former Board Member of WellPoint, Lend Lease and Holcim Owner of Hill Company

John Kispert Former President & CEO of Spansion Board Member of Gigamon and Barracuda Networks Former Board Member of Spansion, Cypress, TriNet and Extreme Networks Managing Partner of Black Diamond Ventures

Gregorio Reyes Former Board Member of Dialog, LSI and Seagate Former CEO of American Semiconductor Equipment Tech and National Micronetics Co-Founder & former CEO of Sunward Technologies, Founding Special Partner & Advisor to Vitruvian Partners

Thomas Volpe Former Board Member of Linear Technology and EFG-Hermes Former CEO of Dubai Group Managing Member of Volpe Investments

Harry You Former CFO of Oracle and Accenture, CEO of BearingPoint and EVP of EMC Former Board Member of Korn/Ferry CFO of GTY Technology

Why shareholders should sell Qualcomm?

Broadcom said Qualcomm has only traded above $82 per share for 3 days over its 26+ year history as a public company

Broadcom says Qualcomm’s revenue projections for FY 2019 are not credible. Qualcomm could not achieve previous commitments including cost reductions. Qualcomm has only grown EPS faster than revenue three times in 10 years.

The company said Qualcomm’s Performance is in the Bottom Decile of the S&P 500.

Broadcom alleges that Qualcomm has failed to turn 4G leadership into stockholder value. Qualcomm has also failed to monetize 4G leadership. Qualcomm has significantly underperformed its peers. Qualcomm CEO Steve Mollenkopf and CFO George Davis are making wrong promises to shareholders. Qualcomm’s Current Board Has No Directors With Prior Semiconductor Experience Outside of Qualcomm.

Qualcomm’s poor execution has resulted in significant revenue declines during a period of strong industry growth. 6 percent was the CAGR revenue growth for the semiconductor industry. During this period, Qualcomm achieved –6 percent CAGR.

Qualcomm is Overstating its 5G Growth Opportunities. Fewer baseband / app processor providers make share increases more difficult û Smartphone market has matured û Unclear which 5G “killer app” or device will drive initial growth.

Qualcomm faced $4 billion in fine in the last three years due to wrong business practices across the world. Qualcomm had issues with Nokia, Panasonic, ParkerVision, NVIDIA, LG, BlackBerry, Apple and Samsung.

Baburajan K