Monday, April 16, 2018
Paul Jacobs, who was ousted as Qualcomm's chairman in March, is talking to strategic investors and sovereign wealth funds to chip in for a fully financed bid to take Qualcomm private in the next two months, according to people familiar with the plan. He would run the company after it's gone private.
One of the potential investors is mobile chip designer ARM, which SoftBank bought in 2016 for more than $30 billion, these people said. ARM's technology forms the basis for most processors used in smartphones and tablets, including Qualcomm's processors.
ARM denied that it has talked to Jacobs about a possible acquisition involving Qualcomm. " "There have been no discussions between Arm and Paul Jacobs on any potential acquisition of Qualcomm," a spokesperson said.
Jacobs has hired two banks and lawyers to work on the deal, the people said. When the deal is completed, he is hoping for fewer than ten owners to be involved. Economic ownership might not align with control of the company. Jacobs, himself, owns less than 1 percent of Qualcomm.
Control will remain in the United States under Jacobs' plan, which he believes would allow the deal to avoid the kind of scrutiny that sank Broadcom's attempt to buy Qualcomm for around $120 billion. President Trump blocked that deal in March after the Committee on Foreign Investment in the United States expressed concerns over potential national security risks. Broadcom was based in Singapore, but has since re-domiciled to the United States.
Still, Jacobs has been working with CFIUS behind the scenes to address potential problems, which theoretically could arise if a large amount of the economic ownership comes from foreign sovereign wealth funds. The SoftBank-controlled Vision Fund includes a major investment from Saudi Arabia's main sovereign wealth fund.
A person familiar with his thinking says Jacobs does not believe Qualcomm should be carved up, but he believes he can only implement his plan for it as a private company, because that plan will require significant investment and things that public shareholders would not like.
Jacobs' father, Irwin, was a co-founder of Qualcomm, and Paul Jacobs rose through the ranks to become CEO from 2005 through 2014. Steve Mollenkopf has been CEO since then, while Jacobs served as chairman. The board removed him in March after Jacobs informed them of his desire to take the company private.
The company has been involved in a complicated high-stakes legal dispute with Apple, which licenses core wireless technology from Qualcomm. Apple claims that the company overcharges for licenses and has sued it for patent infringement, while Qualcomm has sought to have Apple phones banned from China, among other things. Jacobs plans to settle the dispute with Apple and rely on his strong relationship with Tim Cook, the people said.
Jacobs plans to maintain Qualcomm's license business, unlike Broadcom, which would have shut that piece down, the people said. Jacobs feels the licensing business is actually the strongest part of Qualcomm if operated correctly, the people said.
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