Recently, Broadcom once again shouted to Qualcomm’s shareholders, claiming that they were preparing to increase the purchase price. At present, 78.01% of Qualcomm’s shares are in the hands of the agency.
The advance announcement of Qualcomm’s acquisition intentions has great benefits for Broadcom. First, the company’s stock price will rise, and secondly, it will be able to obtain loans more smoothly and enhance future quotation capabilities.
Qualcomm's institutional shareholders in principle accept Broadcom's offer to hold a larger percentage of Broadcom's shares, and there is no accurate information on the market for new quotes.
Broadcom is likely to have already elected some new directors for the board meeting to be held on March 6th next year. Shareholders participating in the meeting can then vote on this.
In the acquisition battle against Qualcomm, Broadcom CEO Chen Fuyang was arbitraged and basically ignored the opinions of lawyers and bankers.
Broadcom Propagates to Qualcomm's Institutional Investors
Broadcom demonstrated the acquisition of Qualcomm's ambitions and the Qualcomm Board of Directors is stepping up various investments to better protect the company's current leadership position. The information passed by the Qualcomm Board of Directors is that they can also provide investors with good services and will decide whether to support or reject the offer based on further developments in the future.
It is reported that Broadcom has already started to paint the shareholders of the Qualcomm agencies, indicating that it intends to increase the purchase price. It is worth noting that according to the information on the position of investment institutions given in the most recent 13F document, 78.01% of Qualcomm’s stocks are held by major institutions. These institutions are the key targets of any company trying to acquire Qualcomm. Moreover, in the recent period, these institutions are selling stocks, which also shows their attitudes and emotions. The large institutional holders of Qualcomm's stocks include Blackstone, American Pioneer Group, Fidelity International Investment Funds, US State Street Bank and Wellington Management Group.
The core of the new quotation is that Broadcom wants to provide more stocks to the organization to gain their support. As we all know, some of these institutions tend to offer 80 US dollars per share. After Broadcom's initial offer of $70 per share was rejected, Broadcom is currently strengthening cash financing in the corporate bond market.
Broadcom knows his stock price will rise
Broadcom knows that the early announcement of the acquisition of Qualcomm can lead to a rise in the company's share price, which has become a reality. The rising stock price allows Broadcom to obtain more secured credit lines, and the higher share price of Broadcom means higher future quotes. Overall, Broadcom’s share price has risen by more than 1600% over the past eight years.
The initial feedback provided by the shareholders of these institutions is that they will accept in principle that the future will contain a larger proportion of Broadcom stock this new offer. Therefore, the next quote may be 10% more Broadcom stock than the first quote.
Broadcom’s current strategy is to plan to recommend a group of new directors to the Qualcomm Board of Directors at a general meeting of shareholders on March 6, 2018, in order to prompt shareholders to agree to agree to vote for these nominees.
Pressured Qualcomm Board of Directors
It is understood that Bertone CEO Chen Fuyang personally contacted Qualcomm's board of directors in 2016 and talked about acquisitions, but was rejected. This is the trick that Mr. Chen Fuyang used when he used the old Broadcom. The intention of him now to nominate a new board member to the Qualcomm board of directors is to require existing Qualcomm board members to consider the next offer more carefully.
This is in line with Mr Chen’s unwillingness to acquire through lawyers and bankers because he believes that these people usually spend too much time. The CEO of Harvard University Graduate School of Business Administration, once served as a financial advisor at General Motors and PepsiCo, has extensive M&A experience, mastered all the necessary details of the expected transaction, and was accustomed to personally hacking.
If he succeeds in acquiring Qualcomm this time, he will transfer any department that he thinks is surplus, or may remove the non-core business through packing and unbundling, based on the historical experience of a series of actions after Avago purchased Broadcom. Go out.
However, Broadcom’s proposed nomination for Qualcomm’s existing board of directors may be strongly resisted, and Qualcomm’s existing board of directors is mainly younger than Chen Fuyang. The current executive chairman, Paul Jacobs, is the son of the founder of the company, Irving Jacobs. This may be a difficult link to break. Steve Molenkov, the current CEO who stood out from the management team, was originally a processor designer. It remains to be seen whether emotional relationships can counter the prevailing economics.
in conclusion
The strategy and position information Broadcom has adopted in this acquisition, as well as its highly personal approach when the CEO seeks to win Qualcomm should help stockholders analyze the entire acquisition process and help them. Ultimately decide whether or not to support the acquisition.
It seems very likely at this moment that institutional holders with a high percentage of corporate equity will accept bids of around $80 per share, and the percentage of stocks that can be held by Broadcom is higher than the proportion included in the first quote. If the current board of directors tries to obstruct such a proposal, it will directly report hostile prices to shareholders and may also successfully complete the acquisition.
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