Qualcomm Not Splitting Into Two, Board Of Directors Announce
Following a special committee and board of directors meeting, management decide not to restructure Qualcomm’s chip and licensing businesses
Qualcomm will not be separating its business, its board of directors announced today, despite activist pressure and rumours of a split earlier this week.
Qualcomm CEO Steve Mollenkopf said today that “the strategic benefits of the current structure will best fuel Qualcomm’s growth”, following a meeting with the board of directors and management.
Benefits
“The strategic benefits and synergies of our model are not replicable through alternative structures,” said Mollenkopf.
“We therefore believe the current structure is the best way to execute on our strategy to build on our position in the ecosystem and deliver enhanced performance and returns. Looking ahead, we have a focused plan in place that we believe will drive growth and we are off to a good start implementing that plan.”
Chipmaker Qualcomm has been under increasing pressure from activist investor Jana Partners to split the company, a split that would have separated its chip business from its licensing operations.
Supporters of the split claimed that this way would have been more beneficial for shareholders and settled down problems caused by antitrust investigations.
But on the other side of the fence, split naysayers argued that the two business units are too close together, and any separation would have had a detrimental effect.
The review, which was driven by a special committee of the board of directors, addressed the benefits and challenges of the existing Qualcomm structure, and considered a range of alternatives for potentially improving stockholder value.
But following the review this week, there was a unanimous recommendation of the special committee and the Board to keep Qualcomm just the way it is.
“Over the years, as the landscape has evolved, we have periodically analyzed our business structure to test whether we are best positioned to drive stockholder value, and we have made fundamental changes to enhance value, when appropriate,” said Paul Jacobs, executive chairman of Qualcomm.
“Given the dynamic industry and competitive environment, we decided to take a fresh look at our structure to ensure we were doing everything possible to enhance the value of the Company and position ourselves for long-term success.”
