Feb 21, 2018 | SAN DIEGO
Qualcomm Incorporated (NASDAQ: QCOM) today issued the following statement in response to today’s reduced proposal by Broadcom Limited (NASDAQ: AVGO) to acquire all outstanding shares of Qualcomm for $79.00 per share ($57.00 in cash and $22.00 in Broadcom stock):
“Broadcom’s reduced proposal has made an inadequate offer even worse despite the clear increase in value to Qualcomm stockholders from providing certainty around the NXP acquisition. Broadcom has refused and continues to refuse to engage with Qualcomm on price.
The acquisition of NXP Semiconductors will be 40% accretive to our Non-GAAP results, enables us to accelerate our growth strategy, and provides stockholders greater certainty around Qualcomm’s fiscal 2019 Non-GAAP EPS commitment of $6.75-$7.50, which includes $1.50 per share of accretion from NXP.
In deciding unanimously to amend its original offer, made in October 2016, the Qualcomm Board concluded that Qualcomm is far more valuable with NXP than without, and took into account the following:
NXP’s non-GAAP operating income has increased by 20% – which means the $127.50 per share price is actually at a lower multiple than the original deal price
NXP provides significant strategic benefits to Qualcomm including increased revenue diversification, substantial expansion of total available markets (TAM) and greater scale in higher growth end markets of Auto and IoT
The strong market dynamics and positive outlook for key segments
High confidence in annualized cost synergies of at least $500 million based on integration planning
Broadcom is well aware there is no ‘reduction of value by $4.10 per share’ because the transaction could not be completed at $110.00 per share.
The Qualcomm Board is committed to maximizing value for Qualcomm stockholders, whether that be through executing its growth strategy or selling the company. Broadcom’s revised $79.00 per share proposal materially undervalues Qualcomm, fails to take into account the strategic and financial benefits of acquiring NXP, and continues to face a long and highly uncertain path to regulatory approvals.”
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