Qualcomm Rejects $130 Billion Broadcom Merger Proposal

Going further, Qualcomm CEO Paul Jacobs says that the $130 billion offer "significantly undervalues" the company.

Both semiconductor companies did not immediately respond to requests for comment. The language, obviously, left open the door to a higher bid. It also could set the stage for a possibly drawn-out struggle for control of the Qualcomm board. According to a press release from Qualcomm, its board of directors unanimously vetoed the purchase. The nomination deadline is December 8.

Qualcomm's decision was expected, analysts said, as unsolicited bids often are rebuffed as a negotiating tactic. And that doesn't take into account ending Qualcomm's royalty rate feuds with Apple (aapl) and another unidentified phonemaker that are costing the company another $3 billion a year or more.

Qualcomm shares rose 0.8 percent, to $65.11, while Broadcom was off by 1 percent, at $262.24 a share, after the rejection announcement.

Broadcom makes chips for wired broadband communications, including modems, Wi-Fi, switches and routers. The combined company would be third-largest chipmaker behind Intel and Samsung.

The takeover bid came during a bad year for Qualcomm, which has been locked in battle with Apple.

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Qualcomm delivers chips to carrier networks to provide broadband and mobile data.

Our scenario analysis examines Qualcomm earnings in various iPhone royalty scenarios with and without Huawei royalties.

Broadcom's response suggests "the potential of a fully-hostile bid, complete with proxy fight, could be building, with the nomination deadline for Qualcomm's board fast approaching".

He added: "No company is better positioned in mobile, IoT, automotive, edge computing and networking within the semiconductor industry".

Closing the deal, though, has its own challenges. It thinks it's worth more than the present offer. The deal awaits approval in China as well. Qualcomm announced today it has rejected Broadcom's takeover bid, and for now, it will remain subsidiary to no one. However, that price may be hard to hold.

-Cara Lombardo contributed to this article.

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