Qualcomm institutional investors expressed their position to Broadcom: they want to buy at least $10 more per share

Source: Content from Tencent Technology, thank you.

According to foreign media reports, some institutional investors of Qualcomm said on Monday that if Broadcom wants to win their support for the acquisition of Qualcomm, it needs to raise the acquisition price to at least $80 per share. Previously, Broadcom's proposal to acquire Qualcomm at $70 per share was rejected by the latter's board of directors.

"If Broadcom can raise the price to $80 per share, we would be interested in evaluating the offer," Daniel O'Keefe, manager of the $3.1 billion Artisan Global Value Fund, said on Monday. "Qualcomm's board should ask Broadcom to offer a higher price."

Broadcom announced earlier this month that it had submitted an acquisition offer to Qualcomm. Broadcom proposed to acquire Qualcomm in a cash-and-stock deal. If the deal goes through, it will be the largest merger and acquisition deal in the history of technology. However, Qualcomm formally rejected Broadcom's $103 billion acquisition offer on November 13. Paul Jacobs, chairman of Qualcomm's board of directors, said: "The company's board of directors unanimously believes that Broadcom's proposal clearly underestimates Qualcomm's leading position in mobile technology and future development prospects."

Broadcom, which did not raise the purchase price, said it remains "fully committed" to acquiring Qualcomm and has received positive feedback from investors and customers. From the current situation, Qualcomm's shareholders seem to still be on the side of the company. However, Broadcom CEO Hock Tan is a tough negotiator, and Qualcomm is clearly in big trouble.

The global chip industry has been undergoing a wave of mergers and acquisitions over the past two years, and Hock Tan has led Broadcom to play an active role. Through a series of transactions, Hock Tan has doubled the size of the company, which has also been supported by Broadcom shareholders and has driven the company's stock price up. One of the reasons why Broadcom investors appreciate Hock Tan is that he can complete transactions on the terms he sets.

In the three largest M&A deals that Tan Hock Yang has completed - LSI, Broadcom and Brocade - the final acquisition price was no more than 6.8% higher than Broadcom's initial offer. When acquiring LSI in 2013, LSI's then CEO Abhi Talwalkar had asked for a $0.10 increase in the $11.15 per share acquisition price, but Tan Hock Yang said that $11.15 was the final acquisition offer. In the end, LSI's board of directors succumbed to Tan Hock Yang's offer.

Qualcomm's stock price closed at $66.47 on Monday, down 0.37% from the previous trading day. This price has risen by about 28% from the stock price when the media broke the news on November 3 that Broadcom would acquire Qualcomm. Several Qualcomm investors said that if Broadcom raised the acquisition price by 6.8%, the price of acquiring Qualcomm would reach $74.76 per share, which is still lower than Qualcomm's actual value.

"We are now expecting Broadcom to raise its offer price," said David Rolfe, chief investment officer at Wedgewood Partners, which oversees $5.2 billion in investment assets. "To get enough Qualcomm shareholders to support it, Broadcom should raise its offer price to at least $80 per share."

Although Qualcomm investors do not like Broadcom's acquisition method with open reservation clauses, the many difficulties Qualcomm is currently facing, such as the global patent lawsuits with Apple, have already exhausted their patience and weakened their confidence in the company's future. Qualcomm's stock price is the worst performing chip stock this year. Before the news that Broadcom would acquire Qualcomm, the latter's stock price had fallen by 16% this year, far less than the 41% increase in the Philadelphia Stock Exchange Semiconductor Classification Index during the same period. Broadcom's stock price has risen by 47% this year. Although Qualcomm's stock price has subsequently risen sharply, its current stock price is still about 5% lower than Broadcom's acquisition price.

Daniel Morgan, vice president of Synovus Trust, a trust investment company that holds Qualcomm shares, said: "Many fund managers are exhausted of holding Qualcomm shares." If Broadcom raises the acquisition price to $85 to $95 per share, I believe that the vast majority of Qualcomm investors will accept such an acquisition price.

Chen Fuyang said earlier this month that if Qualcomm refuses, Broadcom is still interested in a hostile takeover. Earlier, media reported that before the December 8 deadline, Broadcom was already looking for new nominees for Qualcomm's board of directors, preparing to have them run for company directors at Qualcomm's shareholders meeting early next year.

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