The battle of the Broadcom boardroom with Qualcomm will likely lead to a higher bid –

The battle of the Broadcom boardroom with Qualcomm will likely lead to a higher bid


It's war.

Broadcom Ltd. (AVGO) on Monday, December 4 took its hostile offer of $ 130 billion to buy Qualcomm Inc. (QCOM) to the chip maker's shareholders by launching a total hall-making effort to help propel your commercial effort.

The battle for the semiconductor company's boardroom was expected as Qualcomm said last month it was rejecting Broadcom's unsolicited offer of $ 70 in cash and stock. The agreement, if it were ever consummated, would represent the greatest technological combination in history.

Qualcomm, which is in the process of completing an acquisition of NXP Semiconductors NV (NXP) for $ 47 billion, reiterated Monday that Broadcom's offer "dramatically underestimates." "In a statement, Qualcomm said that Broadcom's directors are in conflict because they are looking for seats to boost Broadcom's undervalued offer."

Broadcom did not raise its offer, although it is possible that such a move may arise in the coming months. Instead, he sought to nominate 11 dissenting candidates to Qualcomm's board of directors in a move that would completely replace the existing semiconductor company director base.

The measure was expected to occur due to the Qualcomm deadline. to nominate candidates for dissident directors for their annual meeting in 2018 was fast approaching.

Broadcom's hostile bid was scheduled to run Boardroom Battle

A person familiar with the strategy noted that the hostile bid Broadcom was timed in part, so if Qualcomm rejected the offer, I could follow it with a director's fight of meeting room. All candidates for the director have relevant experience. For example, a nominee, Samih Elhage, is the former president of Mobile Networks Business for Nokia Group. However, the board would not spend much time in power. Once elected, their main responsibility would be to agree to sell the business to Broadcom.

Waiting for a higher premium to defer shareholders

In a statement, Broadcom President Hock Tan said he has heard from many Qualcomm shareholders who said he wants his company involved. Now that Broadcom has nominated its board of directors, it hopes that Tan and his team begin to travel by the EE. UU To start negotiating directly with the shareholders. An activist investor who has been involved in this type of situation suggested that shareholders will always want a higher price, above the premium that Broadcom has already offered. Once Broadcom receives the comments, the question will be whether it will succumb to shareholder pressure and increase its offer. He added that in these types of situations, the definitive premium paid is usually substantial.

In addition, shareholders will need to receive some kind of guarantee that once the Broadcom directors are installed, they will not change the price or alter it in any way. the terms of the deal. If Qualcomm's board believes it faces a defeat in the boardroom, it can reluctantly decide to negotiate with Broadcom so that directors can badure shareholders that the agreement will be binding.

Broadcom can file suit in Delaware

Qualcomm, which is incorporated in Delaware, is likely to try to delay its annual meeting, which will give it time as it seeks to involve its own shareholders. In a statement Monday, Qualcomm said Broadcom's directors are in conflict because they are seeking seats to boost Broadcom's bid, which "dramatically underestimates" the company. Qualcomm also said the offer would "exclude" Qualcomm's options for more than a year given the "magnitude of regulatory problems" surrounding the deal.

The comments suggested that Qualcomm will try to delay its meeting and fight against the offer in the coming months. However, there are only so many months that it could be delayed before a Broadcom Delaware lawsuit can force Qualcomm to hold its meeting. A person familiar with Delaware law suggested that Broadcom will file a lawsuit if Qualcomm postpones its meeting for 13 months from its previous meeting. He added that the lawsuit will take three months, which means that the meeting and the battle of the board will be held no later than June.

Alternatively, Qualcomm could look for a white knight buyer, who could be considered more friendly. and willing to pay more than Broadcom. For example, in 2014, Valeant Pharmaceuticals International Inc. joined forces with Bill Ackman's Pershing Square to employ an election effort in the boardroom in an attempt to buy botox maker Allergan PLC. However, Allergan defended Valeant by agreeing to be acquired for an award by White Knight Actavis in a defensive play.

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