Qualcomm Ousts Paul Jacobs From Board as He Chases Long-Shot Bid for Chip Giant--Update
March 16 2018 - 08:00PM
Dow Jones News
By Dana Cimilluca, David Benoit and Dana Mattioli
Qualcomm Inc. took the extraordinary step of removing former
Chairman and Chief Executive Paul Jacobs from its board after he
broached a long-shot bid for the chip-making giant.
The decision to oust Mr. Jacobs was made at a board meeting
Friday, according to people familiar with the matter. At the
meeting, he reiterated his desire to pursue a potential buyout
after raising the issue in a letter to the board Tuesday, according
to a person familiar with the events.
Several directors tried to talk Mr. Jacobs out of the idea,
which they regard as far-fetched, this person said. When he
persisted, the rest of the board asked him to step down because
they don't believe he can be a director and work on a bid at the
same time. Mr. Jacobs disagreed. The board took a vote and he lost,
this person said.
It has also told him he cannot use insider information for work
on any bid.
In a statement late Friday announcing the move, the possibility
of which was earlier reported by The Wall Street Journal, Qualcomm
said Mr. Jacobs won't be renominated to the board at the annual
meeting next week.
"Following the withdrawal of Broadcom's takeover proposal,
Qualcomm is focused on executing its business plan and maximizing
value for shareholders as an independent company," it said. "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."
Mr. Jacobs released a statement saying: "There are real
opportunities to accelerate Qualcomm's innovation success and
strengthen its position in the global marketplace. These
opportunities are challenging as a stand-alone public company, and
there are clear merits to exploring a path to take the company
private."
He added: "It is unfortunate and disappointing they are
attempting to remove me from the board at this time."
Mr. Jacobs couldn't be reached for further comment.
On Monday, President Donald Trump blocked Broadcom Ltd.'s $117
billion hostile bid for Qualcomm, reflecting officials' concerns
about an intensifying arms race between the U.S. and China over
advanced technologies.
The latest round of drama at Qualcomm comes a week after Mr.
Jacobs was stripped of the title of executive chairman against his
will after some investors complained about his pay and argued that
having separate roles of executive chairman and chief executive
causes confusion about who is in charge, according to another
person.
Mr. Jacobs was replaced with an independent director and the
move was widely seen as an effort by Qualcomm to enhance its
governance and bolster its case against Singapore-based Broadcom.
According to people familiar with the matter, Mr. Jacobs was
unhappy about the move.
At an annual meeting that was scheduled to occur earlier this
month, Qualcomm shareholders were to vote on whether to oust
current board members in favor of directors nominated by Broadcom.
The meeting was delayed at the behest of the Committee on Foreign
Investment in the U.S. before the deal was blocked by Mr.
Trump.
It is now scheduled to take place next Friday and Qualcomm
directors are expected to be re-elected unopposed as the Broadcom
ballots won't be tallied.
Had the vote gone ahead as originally planned, a number of
Qualcomm directors were expected to lose their seats, including
possibly Mr. Jacobs, people familiar with the matter said.
Mr. Jacobs, the son of Qualcomm's co-founder, owns just 0.13% of
Qualcomm, which is based in San Diego and has a market value of
about $90 billion. To pull off a takeover of the company, which
would cost upward of $100 billion, he would need to secure an
inordinate amount of financing, and it isn't clear where he would
get it.
Mr. Jacobs took over as chief executive from his father, Irwin,
in 2005, before passing the baton to current CEO Steve Mollenkopf
in 2014.
--Ted Greenwald contributed to this article.
Write to Dana Cimilluca at dana.cimilluca@wsj.com, David Benoit
at david.benoit@wsj.com and Dana Mattioli at
dana.mattioli@wsj.com
(END) Dow Jones Newswires
March 16, 2018 19:45 ET (23:45 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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