Qualcomm also said the transaction might face regulatory scrutiny that would cast doubt on its completion.
Broadcom CEO Hock Tan, who said earlier this month he would redomicile his company to the United States from Singapore, has stated he is open to launching a takeover battle.
In a statement, Paul Jacobs, executive chairman and chairman of the board of Qualcomm, said: "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".
Broadcom Chief Executive Officer Hock Tan on November 6 offered $70 a share in cash and stock for Qualcomm, seeking to build a powerhouse that leads the market for wireless chips in devices like Apple Inc. iPhones.
Even before Qualcomm's response, Tan and his advisers were preparing to wage a proxy battle in which they would appeal directly to Qualcomm investors.
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Qualcomm said it would "assess the proposal in order to pursue the course of action that is in the best interests of Qualcomm shareholders".
Qualcomm stocks ended trading Monday up $1.92 to $66.49. "We would not make this offer if we were not confident that our common global customers would embrace the proposed combination". "We are confident in our ability to create significant additional value for our stockholders as we continue our growth in these attractive segments and lead the transition to 5G".
Buying Qualcomm would reshape the chip industry, transforming Broadcom into the third-largest semiconductor maker, behind Intel Corp and Samsung Electronics Co. If it does sell to Broadcom, it means the combined businesses' chips will be present in more than a billion smartphones sold every year. The deal would dwarf Dell Inc.'s $67 billion acquisition of EMC in 2015 - then the biggest in the technology industry.
"Qualcomm shareholders are likely to hold out for more, but we believe something in the US$80-ish range is likely enough to bring majority around", Sanford C. Bernstein analyst Stacy Rasgon wrote in a note published at the weekend. A statement release by Qualcomm said that the board had "unanimously rejected the unsolicited proposal announced by Broadcom". It is engaged in a patent infringement dispute with Apple Inc, and is also trying to close its $38 billion acquisition of automotive chipmaker NXP Semiconductors NV after signing a deal in October 2016. That purchase is being held up by regulatory approval.
Qualcomm has moved quickly to rejected rival Broadcom's $130bn takeover bid, claiming that it "dramatically undervalues" the company, but hinted that a significantly raised offer might be accepted. Qualcomm and Broadcom did not immediately respond to requests for comment.
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