TechTheDay

Qualcomm’s problems seem to never end. There’s seem to be a number of people who want to take over it. Last time it was Broadcom who tried to buy off Qualcomm for a hefty sum of $120 billion, but Trump blocks the deal last month after expressing national security concerns. Qualcomm, they claimed, is the US leader in research and development of 5G technology. This time, however, the take over didn’t come from outside the company, but from the inside, or at least, from one formerly their own.

Power Grab

Paul Jacobs, son of Qualcomm’s Irwin Jacobs, has been the CEO of Qualcomm since 2005 but he was removed from the possibility of being re-assigned to the position by Qualcomm’s board of directors when he informed them that he was exploring the possibility of taking Qualcomm private by buying out the chipmaker. To Jacobs, the decision was “unfortunate and disappointing.” This was announced during a shareholder meeting last March.

According to the company, if Jacobs ever presents a formal proposal, they would “evaluate it consistent with its fiduciary duties to shareholders,” for which Jacobs was glad to hear. As a long time executive of Qualcomm he feels that the company has “real opportunities” that would be easier to pursue had Qualcomm been a private company. He said that Qualcomm, being as it is, makes taking on these opportunities “challenging”. He also said that there are merits in taking the path as a private company that would help increase Qualcomm’s long-term performance, “deliver superior value to all stockholders,” and increase their contribution to USA’s technology.

A CNBC source commented that “Jacobs snapped,” , an event which seems linked to the Broadcom buyout. He resigned from his position while the company was resisting Broadcom’s take over and it was thanks to the decision by the Committee on Foreign Investment in the U.S. that, with an order from the President, Broadcom halted their aggressive attempt to buy Qualcomm. Another source told CNBC that Jacobs has plans for Qualcomm, one that public shareholders might not like due to part of it needing bigger investments.

Negotiations

Since then Paul Jacobs has been negotiating with possible investors to help him buy out Qualcomm. Once the company goes private he will be the one running it. One of the potential investors mentioned was ARM, which was bought by Japan’s Softbank for $32 billion in 2016. ARM eventually denies that any talk between them and Jacobs had taken place with regards to buying out Qualcomm.

Jacobs was said to have enlisted two banks and lawyers to help him with the deal. Jacobs hopes that he can reduce the number of owners to below 10 should his plan work. Jacobs himself owns 1% of Qualcomm.

What Can This Mean For Qualcomm?

The board of directors probably knows what Jacobs is planning for Qualcomm, which is why he got booted off the position (the CNBC source did say the shareholders might not like it). But if Jacobs bought off the company it won’t be in any danger of falling into the hands of a foreign country. Or does it? After making the company private he might re-domicile the company to another country, maybe even China. And how could all these possibly affect Qualcomm delivering materials needed for 5G tech, which companies are claiming to be deployed soon?

So for now, Qualcomm has a new takeover to fight. One that doesn’t seem to have it’s own obvious dangers for now. If Paul Jacobs is able to gather the funds he needed, you have to wonder which companies would help him. Broadcom is re-domiciling to America and they do want to buy Qualcomm at one time so for them funding Paul might not be a far-fetched idea.