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Qualcomm and Broadcom to meet to negotiate over $145 billion bid this week

Chip makers Qualcomm and Broadcom will meet face-to-face for the first time this week to discuss Broadcom’s $145 billion takeover bid.

The meeting comes after Broadcom tabled a final “take it or leave it” offer last week, raising its bid from $130 billion (factoring in net debt) to $145 billion – largely by raising the Broadcom shares component of its bid, rather than the cash. 

However, Qualcomm responded that the new offer still “undervalues” the company, particularly the promise of its 5G technology. 

According to Reuters, executives at both companies will attend a joint meeting on Wednesday to mull over the details of the deal.

In addition to the bid, Broadcom has also pledged to pay an $8 billion break-up fee should Qualcomm agree to a deal that is subsequently stopped by anti-trust regulators.

While Qualcomm’s curt missive last week claimed that the deal still undervalued the company, Qualcomm CEO Steve Mollenkopf added that he would be happy to meet with Broadcom’s management to address “serious deficiencies in value and certainty in its proposal“.

Before the meeting takes place on 14 February, it is believed that they will each spend some time with advisory companies ISS and Glass Lewis to get their thoughts on the situation.

During the meeting, executives at Broadcom will likely attempt to convince Qualcomm shareholders to back a deal. They initially wanted to week over the weekend.

Ahead of the meeting on Wednesday, Broadcom is continuing  to work behind the scenes to lobby Qualcomm shareholders to replace the firm’s board.

However, a Broadcom buy-out of Qualcomm would face stiff competition, with the merged company’s dominance of many semiconductor markets raising multiple anti-trust issues.

Broadcom has suggested that it could sell two of Qualcomm’s businesses if its proposal is accepted: its wifi networking processors and RF front-end chips. However, that would still leave the merged company in a commanding position across a range of markets that could mean both reduced choice and higher prices.

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