(Reuters) – Qualcomm Inc mentioned on Wednesday it met with Broadcom Ltd earlier within the day to discuss the latter’s revised $121 billion bid, the primary time the chipmakers have mentioned what can be the know-how sector’s largest ever acquisition.
The consequence of the assembly will decide whether or not Qualcomm, which has resisted Broadcom’s takeover strategy since November, will have interaction in negotiations or proceed to defend itself by rallying its shareholders, who’re scheduled to vote on March 6 on changing nearly all of its board with Broadcom nominees.
Neither aspect commented on what transpired within the two-hour assembly. Qualcomm mentioned in its assertion its board would meet to decide its subsequent steps.
Broadcom’s high executives left the assembly with the impression that their Qualcomm counterparts listened to them however didn’t have interaction, in accordance to sources aware of the matter who requested not to be recognized as a result of it was personal.
The assembly got here after Qualcomm rejected Broadcom’s revised cash-and-stock bid of $82 per share final week and mentioned the brand new offer nonetheless undervalued it and fell nicely wanting the agency commitments on regulatory points it anticipated.
Qualcomm had mentioned it could take the assembly to enable Broadcom to clarify how it could try to bridge the gaps in each worth and deal certainty and to higher perceive the problems that remained unaddressed in its proposal.
Qualcomm mentioned final week that Broadcom’s plan to tackle antitrust issues by promoting two Qualcomm companies, its Wi-Fi networking processors and RF Front End chips for cellphones, was insufficient to allay issues that the deal wouldn’t win regulatory approval.
The takeover battle is on the coronary heart of a race to consolidate the wi-fi know-how gear sector, as smartphone makers reminiscent of Apple Inc and Samsung Electronics Co Ltd use their market dominance to negotiate down chip costs.
Broadcom is principally a producer whose connectivity chips are utilized in merchandise starting from cellphones to servers. San Diego-based Qualcomm primarily outsources the manufacturing of its chips that are used for the supply of broadband and information, a enterprise that will considerably profit from the rollout of 5G wi-fi know-how.
Qualcomm has argued that signing a take care of Broadcom may create uncertainty with its clients in the course of the time it takes to full the deal. Broadcom has promised to pay a breakup payment of $eight billion within the occasion regulators thwart the deal, in addition to a “ticking” payment of 6 p.c per 12 months on the money portion of the consideration if the deal takes greater than 12 months to shut.
Reporting by Greg Roumeliotis in New York; Additional reporting by Muvija M in Bengaluru; Editing by Sriraj Kalluvila and Cynthia Osterman