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Qualcomm warns of customer losses, legal hazards to Broadcom buyout

Broadcom, which makes connectivity chips used in products ranging from mobile phones to servers, first approached Qualcomm in November


A Qualcomm sign is pictured at one of its many campus buildings in San Diego, California, U.S (Photo: Reuters)

Inc warned on Friday it could lose two large clients if it accepted chipmaker Ltd's revised $121 billion buyout offer and said it saw no path to regulatory approval of any deal.

In a filing that followed up on its letter to Chief Executive Hock Tan on Thursday rebutting his latest offer, the San Diego-based company laid out more detail on its reservations about the deal.

It said two customers who provide more than $1 billion in chip revenue had said they would likely move designs away from if the deal went through, citing a lack of confidence in Broadcom's ability to continue to lead in technology.

Broadcom, which makes connectivity chips used in products ranging from mobile phones to servers, first approached in November.

After its first offer was rejected, nominated a slate of directors to replace Qualcomm's board. shareholders are scheduled to vote on the nominations on March 6.

With that in mind, the company is seeking to strike a balance between continued resistance to Broadcom's takeover and heeding the calls of shareholders who have urged the company to engage with its rival in case it can clinch an attractive deal.

counts Apple Inc and Samsung Electronics Co Ltd among its key customers.

Other clients include Huawei Technologies, LG Electronics, Oppo, Sony Corp, Vivo and Xiaomi, all of which make smartphones.

In rejecting Broadcom's latest offer on Thursday, offered to meet its rival to see if they can hammer out their differences. welcomed the move, but said it wanted to meet before Qualcomm's proposed date on Tuesday, ahead of scheduled meetings with proxy advisory firms.

A date for a meeting between and had not been finalized as of Friday morning.

In the filing on Friday, also raised concerns about potential antitrust issues and said would damage, if not destroy, its licensing business that is valued at over $4 billion.

"completely ignores the reality that in the last five years, several large, complex international mergers involving multiple regulators have taken over 18 months. And at the moment, there is no 'next' step," said.

said it will pay $8 billion if the deal fails to win regulatory approval.

Separately on Friday, said it extended the cash tender offer to buy NXP Semiconductors NV by two weeks to February 23.

had said earlier that its revised offer was contingent on either buying NXP at currently disclosed terms of $110 per share in cash or the $38 billion deal being terminated.

First Published: Sat, February 10 2018. 22:16 IST