Mobile chipmaker Qualcomm rebuffed the $103 billion offer made by its rival Broadcom. Qualcomm cited undervaluation as the reason behind its rejection of the bid.
The news comes after Broadcom made the substantial bid to acquire its rival’s business last week. Broadcom hoped that by acquiring the chipmaker it would become the dominant chip supplier in the global market. Qualcomm, however, believed that the bid had not valued the financial scope of the company correctly and would face regulatory hurdles in the times to come.
Qualcomm’s reaction means that Broadcom has limited options left. The company can now either raise its bid, opt for a proxy fight, or launch a hostile exchange offer against the company.
Qualcomm’s shares went up nearly 1.8 % in early afternoon trading after it made its announcement. However, Broadcom’s shares dropped by nearly 0.4% in the aftermath.
Broadcom stated that it would now attempt to enter talks with Qualcomm’s board and management on the issue. The company claimed that it had already received a great deal of positive feedback on its bid from major customers and stockholders.
The company stated that it still believes its proposal is the most “attractive, value-enhancing alternative available to Qualcomm stockholders”
Qualcomm’s valuation of its own company has come as a bit of a surprise to most. It is no secret that the company has recently gone through a rough patch after entering a tussle with its major customer, Apple Inc. The Apple suit has reportedly drained much of the company’s resources.
However, Qualcomm’s firm belief in itself combined with Broadcom’s evident eagerness to complete the takeover hints that the company may certainly have some golden eggs up its sleeve.