Qualcomm management has unknowingly invited outside takeover interests because of continued contention with its patent licensees. It's up to management to thwart any future takeover attempts with a real plan to quiet down its licensing disputes. For example, taking better care of the licensing business through outsourcing or a spin-off of the division could potentially squash all takeover arguments.
Until then, shareholders are likely to vote for takeover proposals that will give them a higher valuation than what management can deliver under its current less-optimal licensing situation. The only defense Qualcomm management had against the earlier Broadcom bid was the help from the Trump administration expressing national security concerns about the proposed takeover.
But in a domestic takeover attempt, this same line of defense cannot be drawn, and management can be very vulnerable absent any improvements in its licensing business.This would be especially true if the takeover interest comes from Mr. Paul Jacobs, who is reportedly contemplating on taking back the company co-founded by his father.
Setting aside potential financing challenge, nothing else could really stand in the way of the former chairman's attempt to oust current management and get back control of Qualcomm.
While Qualcomm's defenders may argue in any other case whether an acquirer can just come in and take over the company's massive wireless technologies and patents, that argument collapses when dealing with a founding family.
In any case, Qualcomm investors are totally hedged against both the current less satisfying business and the constant takeover talks. Either management is forced to devise a creative solution to solve its licensing problems, or someone else takes advantage of Qualcomm's problematic licensing situation and acquires the company, both of which would deliver better returns for shareholders.
One of those two things must happen. It's a contest between management and someone trying to buy it out, something that should be welcomed by potential and existing Qualcomm investors alike.
Until then, shareholders are likely to vote for takeover proposals that will give them a higher valuation than what management can deliver under its current less-optimal licensing situation. The only defense Qualcomm management had against the earlier Broadcom bid was the help from the Trump administration expressing national security concerns about the proposed takeover.
But in a domestic takeover attempt, this same line of defense cannot be drawn, and management can be very vulnerable absent any improvements in its licensing business.This would be especially true if the takeover interest comes from Mr. Paul Jacobs, who is reportedly contemplating on taking back the company co-founded by his father.
Setting aside potential financing challenge, nothing else could really stand in the way of the former chairman's attempt to oust current management and get back control of Qualcomm.
While Qualcomm's defenders may argue in any other case whether an acquirer can just come in and take over the company's massive wireless technologies and patents, that argument collapses when dealing with a founding family.
In any case, Qualcomm investors are totally hedged against both the current less satisfying business and the constant takeover talks. Either management is forced to devise a creative solution to solve its licensing problems, or someone else takes advantage of Qualcomm's problematic licensing situation and acquires the company, both of which would deliver better returns for shareholders.
One of those two things must happen. It's a contest between management and someone trying to buy it out, something that should be welcomed by potential and existing Qualcomm investors alike.
