Qualcomm has accused Broadcom of making an “opportunistic, inferior” takeover bid that undervalues the company, ahead of a crucial meeting of shareholders.
The meeting will be held on 6 March, when Qualcomm shareholders will vote on new members for the company’s board.
Broadcom has nominated 11 candidates as it looks to double down on its $130 billion bid for its rival, which was made in November and rejected by Qualcomm a week later.
In a letter to shareholders, released today, Qualcomm said the bid “dramatically undervalues” the company, would create regulatory problems lasting potentially more than 18 months, would weaken the company’s ability to deliver in the shift to 5G, would create a split in strategy if the Broadcom nominees are voted to the board, and would solely benefit Broadcom shareholders.
Qualcomm described the move to 5G as “one of the most significant technology shifts and market opportunities in the history of wireless”.
The company claimed to be between 12 and 24 months ahead of competitors in the move to the next generation technology, citing a range of trials with numerous operators and vendors.
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The letter said: “Qualcomm is the only company to successfully lead in each mobile technology transition, in every case emerging as a larger and even better positioned company. 5G will be no different.
“Leading in 5G builds upon success and leadership in 4G, particularly 4G LTE Advanced, upon which the 5G technology is built.”
It said it expects 5G opportunities, coupled with those elsewhere in mobile, the Internet of Things, connected cars, computing and networking to lead to a serviceable addressable market of $150 billion by 2020, six times that of the chipmaker’s market in 2015.
Another issue raised by Qualcomm was regulatory hurdles, arguing a Broadcom takeover would need clearance by at least a dozen regulators.
It added: “Regulatory review would likely take at least 18 months to complete, if ever, and would likely require meaningful divestitures, ongoing restrictions on the combined entity’s conduct, potentially contradictory and irreconcilable demands from regulators, and the transaction could be blocked outright.”
The letter also addressed the company’s ongoing legal action with Apple. Qualcomm was accused by Apple last year of withholding around $1 billion in payments.
Qualcomm repeated its counterargument in the letter, claiming the iPhone maker continues to “utilise its intellectual property without paying”.
It accused Apple of ordering its own contracted manufacturers to stop paying Qualcomm. The letter added: “Apple has often used such litigation to try to renegotiate with its suppliers, and Qualcomm has taken legal action to enforce our contracts.”
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