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Qualcomm meets with Broadcom to discuss $121 billion offer

SAN DIEGO — Qualcomm executives met Wednesday with those from Broadcom to discuss a $121 billion takeover deal that Qualcomm rejected last week.

Leaders from the two companies met at the Qualcomm board’s request after it rejected a revised buyout offer from Broadcom last week. Qualcomm leaders felt the $82-per-share offer undervalued the San Diego-based chipmaker and would come with regulatory uncertainty.

Broadcom last week called the proposal its “best and final” offer.

In his rejection letter, Qualcomm board Chairman Paul E. Jacobs said he would like to hear if Broadcom is willing to pay a higher per-share price, one that takes into account the value of Qualcomm’s purchase of NXP Semiconductors, the licensing disputes Jacobs believes will resolve in Qualcomm’s favor and the opportunity presented for the company in the development of 5G, the next generation of cell phone technology.

The board also said it would be “extremely important” that Broadcom commit to any means necessary of clearing the likely regulatory hurdles it would face with the purchase.

“We met with representatives of Broadcom for two hours earlier today, and listened carefully to what they had to say,” according to a board statement released Wednesday afternoon. “The Qualcomm board will promptly meet to discuss the meeting and to determine next steps.”

Like the deal rejected by the Qualcomm board in November, this one would have paid Qualcomm shareholders $60 per share in cash. But the latest offer included an increase in Broadcom stock that would be paid to Qualcomm shareholders — $22 per share, up from $10.

Broadcom is incorporated and currently based in Singapore, but CEO Hock Tan announced late last year while visiting President Donald Trump at the White House that the company would return its corporate headquarters to the U.S., using San Jose as a base.

Buying Qualcomm would make Broadcom the third-largest chip maker, behind Intel Corp. and Samsung Electronics Co. The combined business would become the default provider of a set of components needed to build each of the more than one billion smartphones sold every year.

The company’s hostile takeover attempt has come at a vulnerable time for Qualcomm, which has been embroiled in a long-running legal dispute with Apple and is facing several large fines from governing bodies across the globe. The most recent such fine levied against the San Diego company came from the European Union, which accused Qualcomm of breaking the EU’s antitrust laws to the tune of $1.23 billion. Qualcomm said it would challenge that fine.

If Broadcom is ultimately successful in its takeover attempt, the impact on San Diego could be severe. Qualcomm is one of the few major corporations with a global reach to be headquartered in a city known mainly for tourism, and smaller defense and life-sciences firms.

The company is one of the region’s largest private employers, and the family of co-founder Irwin Jacobs is one of the area’s most generous philanthropists.