Continuing on its previous relentless approaches, Broadcom has now thrown-in its best and final offer to acquire all of the outstanding shares of Qualcomm Incorporated. Under the terms of the new offer, Qualcomm stockholders would receive an aggregate of $82.00 per each Qualcomm share, consisting of $60.00 in cash and the remainder in Broadcom shares. This would value Qualcomm at $121 Billion.
The significantly improved offer, which has been unanimously approved by the Board of Directors of Broadcom, represents a 50% premium over the closing price of Qualcomm common stock on November 2, 2017, the last unaffected trading day prior to media speculation regarding a potential transaction, and a premium of 56% to Qualcomm's unaffected 30-day volume-weighted average price.
Broadcom's improved offer is premised on either Qualcomm acquiring NXP Semiconductors on the currently disclosed terms of $110 per NXP share or the transaction being terminated and is also premised on Qualcomm not delaying or adjourning its annual meeting past March 6, 2018. Broadcom remains confident that the proposed transaction would be completed within approximately 12 months following the signing of a definitive agreement.
Additional details regarding the terms of the improved offer were included in a letter delivered by Broadcom to the Qualcomm board of directors. Broadcom believes this offer is vastly superior to Qualcomm's standalone prospects, with or without the closing of the NXP transaction, and remains hopeful the Qualcomm board of directors will act responsibly on behalf of Qualcomm stockholders and engage with Broadcom on this offer without further delay. The full text of the letter sent to Qualcomm is below:
Board of Directors
Qualcomm Incorporated
5775 Morehouse Drive
San Diego, CA 92121
Dear Members of the Board of Directors:
Broadcom remains committed to acquiring Qualcomm, and we write to present to you our best and final offer.
- Broadcom is prepared to acquire Qualcomm for an aggregate of $82.00 per Qualcomm share, consisting of $60.00 in cash and the remainder in Broadcom shares.
- Broadcom is prepared to pay a "ticking fee" providing for an increase in the cash consideration payable to Qualcomm stockholders if the transaction is not consummated by the one-year anniversary of entering into a definitive agreement.
- Broadcom is prepared to pay to Qualcomm a significant "reverse termination fee" in an amount appropriate for a transaction of this size in the unlikely event we are unable to obtain required regulatory approvals.
- Broadcom is willing to agree to a regulatory efforts provision that is at least as favorable as the one Qualcomm provided to NXP.
- Broadcom has fully negotiated commitment papers with its financing sources in an amount sufficient to fully fund the transaction.
- The Broadcom Board is prepared to invite Paul Jacobs and one other current Qualcomm director to join the combined company's board upon completion of the transaction.
Our offer is premised on the following conditions:
- Either Qualcomm acquiring NXP on the currently disclosed terms of $110 per NXP share or the transaction being terminated.
- Qualcomm not delaying or adjourning its annual meeting past March 6, 2018.
Broadcom's offer represents a 50% premium over the closing price of Qualcomm common stock on November 2, 2017, the last unaffected trading day prior to media speculation regarding a potential transaction, and a premium of 56% to Qualcomm's unaffected 30-day volume-weighted average price.
Our proposal includes substantially more Broadcom stock, which will allow Qualcomm stockholders a greater opportunity to participate in the upside created by the combined company's strategic and operational advantages. Broadcom's track record demonstrates our ability to consistently accelerate share price appreciation following acquisitions and indicates a substantial likelihood that we will exceed our synergies expectations.
This proposal to acquire Qualcomm is extremely compelling compared to any other alternative available to Qualcomm, with or without the acquisition of NXP, and we believe any responsible board would engage with us, without further delay, to turn this proposal into an executed definitive agreement. We continue to hope you choose to engage with us for the benefit of your stockholders. However, we will withdraw this proposal and cease our pursuit of Qualcomm immediately following your upcoming annual meeting unless we have entered into a definitive agreement or the Broadcom-nominated slate is elected.
This letter does not constitute a binding obligation or commitment of either company to proceed with any transaction. No such obligations will in any event be imposed on either party unless and until a mutually acceptable definitive agreement is formally entered into by both parties.
Sincerely,
Hock Tan
Hock Tan
President and Chief Executive Officer
A presentation regarding the proposal has been filed with the SEC and is available on Broadcom's Investor Relations website and www.AVGO-QCOM.com.
On January 5, 2018, Broadcom filed definitive proxy materials in connection with its solicitation of proxies to elect 11 independent, highly qualified nominees to the Qualcomm Board of Directors at Qualcomm's 2018 Annual Meeting of Stockholders, which Qualcomm has announced will be held on March 6, 2018.
