Will it ever end?

Action Alerts Plus holding Broadcom Ltd. (AVGO) expressed a dim view of Qualcomm Inc.'s (QCOM) sweetened bid for NXP Semiconductors NV (NXPI) on Tuesday. By increasing its bid from $110 to $127.50 per share, Broadcom said Qualcomm is essentially $6.2 billion of value from its shareholders and giving it to NXP's investors.

As the investors digest the new bid for NXP, the larger questions are whether Broadcom CEO Hock Tan will walk away from Qualcomm and look for other consolidation opportunities in the semiconductors. Shares of chipmakers such as Qorvo Inc. (QRVO) , SkyWorks Solutions Inc. (SWKS) gained Tuesday after Broadcom said it would evaluate its options.

"There hasn't been overwhelming support from any camp involved, including customers, analysts and investors," Pat Moorhead of Moor Insights & Strategy said, suggesting that Tan would drop his bid for Qualcomm. 

Qorvo, SkyWorks or Intel Corp.'s  modem division could interest Broadcom, the analyst suggested. "Broadcom is weak in 5G and the company needs some kind of play there," Moorhead said. Representatives of Qorvo, SkyWorks, Intel and Broadcom could not immediately be reached for comment.

Tan repeatedly said that Broadcom's bid of $82 per share, which values Qualcomm's total equity at about $121 billion, is his best and final offer.

The markets clearly think that Qualcomm and NXP are worth more. Qualcomm's bid values NXP at close to $45 billion, including outstanding shares plus options and restricted stock units. Qualcomm's market share came to about $93 billion on Tuesday, putting the equity value of the combined companies at $138 billion--well above Broadcom's offer.

"It would take a materially higher offer and it doesn't sound as though Hock is willing to entertain a significant increase," Drexel Hamilton LLC analyst Cody Acree said. 

Qualcomm's March 6 annual meeting had promised to be a showdown between Tan and Qualcomm chairman Paul Jacobs. Broadcom initially nominated a full slate of 11 directors to replace Qualcomm's board, but later reduced its list to six nominees.

Over the weekend, proxy adviser Institutional Shareholder Services Inc. recommended that investors back four out of the six nominees. Broadcom has said it would withdraw its bid if it did not win all six seats or did not reach an agreement with Qualcomm. If investors follow ISS's recommendation, Tan will not get his simple majority.

"That may have been a mistake on Broadcom's part to reduce their slate from 11 to six," Acree said. "Had they stuck with 11, it may have been that ISS would have recommended a higher number."

Some investors would view Broadcom walking away from Qualcomm with a "sigh of relief," Argus Research Co. analyst Jim Kelleher said.

"You have a combination of rising rates and inevitable downturn in the handset market and the semiconductor market," Kelleher added. "They could be in a cash bind [following a purchase of Qualcomm]."

The gain in Broadcom shares Tuesday suggests investors may not be disappointed if Tan focuses on other targets.

Editor's note: This article originally appeared on The Deal , our sister publication that offers sophisticated insight and analysis on all types of deals, from inception to integration. Click here for a free trial.

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