As expected, Qualcomm Inc. (QCOM) - Get Report on Friday, Dec. 22, announced that it had rejected an 11-person slate of dissident director candidates nominated by Broadcom Inc. (AVGO) - Get Report and its partner Silver Lake Partners.
"After a thorough review of the Broadcom-Silver Lake nominees, the governance committee concluded that these nominees are inherently conflicted and would not bring incremental skills or expertise to the Qualcomm board," Qualcomm said in a statement.
Broadcom launched its proxy contest, a total boardroom takeover effort, in December to go with its $130 billion hostile takeover bid for Qualcomm, launched last month. The contest is still moving forward and set to take place at Qualcomm's 2018 annual meeting, which likely will take place in March or April.
There was never any expectation that Qualcomm would accept Broadcom's board candidates since it had moved in November to reject the chipmaker's hostile bid. If elected, the primary responsibility of the dissident slate of directors would be to agree to sell the business to Broadcom.
According to people familiar with the situation, Broadcom's team already has started traveling around the U.S. to begin negotiating with Qualcomm shareholders directly.
Silver Lake, a private-equity firm, helped Broadcom recruit its director candidates.
One activist investor, who has experience in similar situations, suggested that shareholders will always want a higher price, above the premium Broadcom already has offered up. Once Broadcom receives the feedback from shareholders the question will be whether it will succumb to shareholder pressure and hike its offer. The investor added that in these type of situations the ultimate premium paid is usually substantial.
In addition, Qualcomm is in the midst of completing a $47 billion acquisition of NXP Semiconductors NV (NXPI) - Get Report . That acquisition effort is being complicated by Elliott Management's Paul Singer, an activist investor, who is seeking to have Qualcomm pay more than its agreed upon $110 a share to buy NXP. Singer recently sought to bolster those efforts by issuing a 19-page UBS report it had commissioned suggesting that the chipmaker was worth between $120 and $150 a share on a standalone basis.
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