SINGAPORE (Dec 5): Broadcom is now proposing to unseat the board of directors at rival company Qualcomm, after facing multiple rejections in its quest to take over the latter.

The Nasdaq-listed chipmaker on Monday announced its intention to nominate a slate of 11 “independent, highly-qualified individuals” to be elected on Qualcomm’s board of directors prior to the latter’s 2018 Annual Meeting to be held on March 6.

This will be done through a filing with the Securities and Exchange Commission on blue proxy card, said the group in its statement to investors.

The list of nominees includes Monumental Sports & Entertainment Vice Chairman Raul J. Fernandez, The Hill Company owner Julie A. Hill, and Thomas S. Volpe, Managing Member of Volpe Investments LLC, among others.

According to Broadcom’s president and CEO, Hock Tan, Qualcomm’s repeated refusal to engage with Broadcom in the latter’s takeover talks are against its own shareholders’ interests – and that its nominations “give Qualcomm stockholders an opportunity to voice their disappointment with Qualcomm’s directors and their refusal to engage in discussions with [Broadcom].”

“We have heard from many Qualcomm stockholders who have expressed their desire for Qualcomm to engage with us. We also continue to receive positive feedback from customers and, having had initial meetings with certain relevant antitrust authorities, remain confident that any regulatory requirements necessary to complete a combination will be met in a timely manner,” says Tan in his latest statement.

“Although we are taking this step [of unseating Qualcomm’s current board of directors], it remains our strong preference to engage in a constructive dialogue with Qualcomm. We have repeatedly attempted to engage with Qualcomm, and despite stockholder and customer support for the transaction, Qualcomm has ignored those opportunities…  In light of the significant value our proposal provides for Qualcomm stockholders, we believe Qualcomm stockholders would be better served by new independent, highly qualified nominees who are committed to maximising value and acting in the best interests of Qualcomm stockholders,” he adds.

In response, Qualcomm has issued its own statement underscoring the credentials of its current board, while opining that Broadcom’s proposed takeover “could not be completed for well over a year, if ever”.

This is given the magnitude of regulatory issues; the absence the absence of commitments by Broadcom to resolve those issues; Broadcom’s lack of committed financing; and the uncertainty surrounding its transition from Singapore to the US, it adds.

See: Broadcom is moving its headquarters back to US from Singapore, says Trump

“Qualcomm believes that this action is a blatant attempt to seize control of the Qualcomm Board in order to advance Broadcom’s acquisition agenda. These nominees are inherently conflicted given Broadcom’s desire to acquire Qualcomm in a manner that dramatically undervalues Qualcomm to Broadcom’s benefit,” comments the company on its rival's nominations.

As reported in issue 806 of The Edge Singapore, Broadcom on Nov 6 had proposed to acquire all of the outstanding shares of Qualcomm for a US$70 per share ($94.2 per share) consideration, comprising US$60 in cash and US$10 in stock, which represents a 28% premium in the closing price of the target’s common stock on Nov 2.

See: Singapore's largest company by market cap eyes US$105 bil takeover deal

However, Qualcomm had on Nov 13 said its board of directors unanimously rejected the proposal based on the conclusion that the consideration “dramatically undervalues Qualcomm and comes with significant regulatory uncertainty”, and therefore is not in the best interests of its stockholders.

According to Bloomberg’s sources, Tan in 2016 approached Qualcomm privately regarding his takeover intentions but was turned down.

See: Broadcom's Tan got his way on deals; then he targeted Qualcomm