After a week of deliberations, Qualcomm Technologies Inc. has opted to reject Broadcom Ltd.’s record-breaking $105 billion acquisition bid in a move that could set the stage for a historic hostile takeover.

The chip maker’s board of directors unanimously rebuffed the offer in a statement released today on the grounds that the offer is too low. “It is the Board’s unanimous belief that Broadcom’s proposal significantly undervalues Qualcomm relative to the Company’s leadership position in mobile technology and our future growth prospects,” said Qualcomm Chief Executive Officer Paul Jacobs.

Broadcom’s $105 billion offer amounts to $70 per share. That represents a roughly 28 percent premium over Qualcomm’s last trading price prior to the announcement of the proposal, but only because its stock was at the time down 16 percent from the start of the year. The decline came as the result of the company’s ongoing legal battle with Apple Inc., a key buyer of its chips, which has halted patent royalty payments over the dispute.

Qualcomm’s claim that Broadcom is taking advantage of this recent stock price drop at the expense of shareholders has already gained some support. Investor Jerome Dodson, whose Parnassus Endeavor Fund holds 8.2 million shares in the chip maker, told Bloomberg last week that the offer is “dirt cheap.”

And Qualcomm has another major argument against the deal. The company said that the acquisition, which would be the largest in the history of the tech industry should it come to pass, could entail “significant regulatory uncertainty.”

Securing antitrust authorities’ approval would be made particularly difficult by the fact that Broadcom is still trying to get a green light for another acquisition, the $5.5 billion purchase of Brocade Communications Systems Inc. Qualcomm, meanwhile, is in the process of buying NXP Semiconductors NV for $40 billion.

But Broadcom is determined to make a deal happen. When it announced the takeover bid last week, the company said that the offer stands regardless of whether or not the NXP buyout goes through. Moreover, an anonymous insider leaked that Broadcom is prepared to launch a proxy battle and appeal directly to Qualcomm shareholders for approval, thus bypassing the leadership team.

Investors, for their part, are not entirely convinced that the company can push through with the deal. Qualcomm is currently trading at around $65.50 a share, well below Broadcom’s bid price.

Image: Kārlis Dambrāns