Qualcomm may end up accepting Broadcom's acquisition offer, but only if Broadcom pays up.
In a Monday letter, Qualcomm's chairman urged Broadcom to come up with a higher offer. The companies made progress on a deal during a Friday meeting, Qualcomm said, but price has been a sticking point. Qualcomm has thus far rejected Broadcom's initial $105 billion offer and its more recent $121 billion bid.
Both bids were too low, and undervalue Qualcomm, Monday's letter said. In the coming years, the chip maker expects its business to soar, given its "significant lead" in developing 5G technologies for smartphones.
Monday's letter goes on to propose the two companies hold another meeting focused on finalizing a price. To facilitate those negotiations, Qualcomm is asking Broadcom to enter into a non-disclosure agreement.
Broadcom pushed back in its own statement, which urged Qualcomm shareholders to elect a new board of directors at a meeting currently scheduled for March 6, setting the stage for a hostile takeover of Qualcomm.
"If the current Qualcomm board remains unwilling to genuinely engage—and continues with 'engagement theater' on this basis—Broadcom looks forward to negotiating in good faith with the newly elected Qualcomm board," Broadcom said.
Broadcom last week lowered its $121 billion bid to $117 billion, or $79 per share, after Qualcomm moved to acquire NXP for $44 billion. "Qualcomm's owners deserve the chance to preserve Broadcom's $79 per Qualcomm share offer," Broadcom said in its statement.
Qualcomm is one of the biggest mobile chip providers on the planet, so any merger could shake up the entire industry. In addition to its chips, Qualcomm licenses out its technology to smartphone vendors, but Broadcom promises to change that, potentially raising prices.