Weekly Wreck

Broadcom - Is its Takeover of Qualcomm DOA?

Qualcomm [QCOM] hasn't had a very good year. We don't see anyone either inside or outside of the firm saying they are "happy" with shareholder return over the last year. Obviously the ongoing and as yet unsettled Apple suit is not helping.

All of this provides the opportunity for a big player to try and acquire Qualcomm at a significant discount. That big player is of course Broadcom. Obviously there are a lot of opportunities for a firm like Broadcom in acquiring another electronics firm as big as Broadcom. Unfortunately, many of those opportunities are not likely to be embraced by the firms’ clients or global regulators looking to prevent yet another technology monopoly, making this transaction both risky and complex.

Lowering the “best offer” price is not a winning move for Broadcom either, especially when many already considered the current offer subpar. This is probably why Broadcom is looking to take over the Qualcomm Board. Of course one has to ask why shareholders would elect a slate of Board members to enable such a low ball offer for Qualcomm.

Egan-Jones supports the view of Qualcomm management that the current offer by Broadcom is too low and too risky, because of this we are recommending FOR the election of ALL Qualcomm management Director Nominees.