Qualcomm's Jacobs to Leave Board as He Explores Acquisition

(Bloomberg) -- Qualcomm Inc. said director Paul Jacobs, son of the chipmaker’s founder and a former chief executive officer, will leave the board after he decided to explore an acquisition of the company.

"The board reached that decision following his notification to the board that he has decided to explore the possibility of making a proposal to acquire Qualcomm," the company said in a statement on Friday.

Jacobs, 55, was stripped of his executive chairman title last week as the company sought to fend off a $117 billion hostile takeover bid from Broadcom Ltd. The board largely agreed with Jacobs that Broadcom’s bid was too low. However, early counts in a board vote tied to the Broadcom bid showed many Qualcomm shareholders had voted to replace Qualcomm directors, including Jacobs and Chief Executive Officer Steve Mollenkopf. U.S. President Donald Trump blocked the deal earlier this week.

Qualcomm said on Friday that it’s focused on executing the company’s current business plan as an independent entity. "There can be no assurance that Dr. Jacobs can or will make a proposal, but, if he does, the Board will of course evaluate it consistent with its fiduciary duties to shareholders," Qualcomm added in the statement. The company’s shares rose 1.9 percent to $61.75 in extended trading Friday.

Jacobs said taking Qualcomm private would help improve the company’s long-term performance and "bolster a critical contributor to American technology."

"I am glad the board is willing to evaluate such a proposal," he added in a statement. "It is unfortunate and disappointing they are attempting to remove me from the board.”

SoftBank Group Corp. is a possible investor in a Jacobs’ buyout of Qualcomm. If that happened, the Japanese technology giant would support the transaction as a minority shareholder, according to a person familiar with the situation. Any deal is at the exploratory stage and no financial commitments have been made, the person also noted. They asked not to be identified discussing private deliberations.

Trying to take the mobile-phone chipmaker private may be a last-ditch effort to preserve the Jacobs family’s influence over the San Diego-based company they founded. Jacobs was chairman of Qualcomm from 2009 until earlier this month and served as CEO from 2005 until 2014.

The idea has been been largely dismissed by analysts, because it would be expensive and could by blocked by the U.S. government, like Broadcom’s failed bid.

Jacobs owns less than 0.5 percent of Qualcomm, according to data compiled by Bloomberg. For an individual, raising the money needed to complete a leveraged buyout of more than $100 billion would be challenging to say the least, particularly if funding sources are restricted to the U.S. due to regulatory scrutiny on overseas chip deals.

There’s at least one example of a tech founder using a buyout to keep control of their company: In 2013, Michael Dell took the eponymous computer maker private in a $24.9 billion deal. Dell is now considering taking the company public again.

Qualcomm’s board nominees are on course to get only 16 percent of the votes cast at its forthcoming shareholder meeting, even though they’re now unopposed, Broadcom Chief Financial Officer Tom Krause said earlier this week.

©2018 Bloomberg L.P.