Qualcomm on Tuesday increased its bid to buy NXP Semiconductors, agreeing to pay $127.50 for each share of the Dutch chipmaker. The revised amount is 16 percent higher than what Qualcomm originally proposed last October, which at the time stood at $110 per share. Qualcomm's amended agreement is an aggressive move that is seen in part as a strategy to fend off an hostile takeover by Broadcom.
"NXP is a highly strategic and attractive acquisition for Qualcomm that enhances the value of our leading 5G technologies. We also believe the revised agreement provides certainty for both Qualcomm and NXP stockholders," said Dr. Paul E. Jacobs, Chairman of the Board of Qualcomm.
Tom Horton, Qualcomm's presiding director, said the new price represents an "attractive acquisition" and that acquiring NXP will enable Qualcomm to accelerate its growth strategy. The bump in price was also enough to convince investors who collectively control around 28 percent of NXP to go give their stamp of approval, including Elliott Management, an activist hedge fund that felt the initial offer was too low.
"Qualcomm’s leading SoC capabilities and technology roadmap, coupled with NXP’s differentiated position in Automotive, Security and IoT, offers a compelling value proposition. We remain highly confident in our fiscal 2019 Non-GAAP EPS target of $6.75-$7.50, which includes $1.50 per share accretion from the acquisition of NXP. With only one regulatory approval remaining, we are working hard to complete this transaction expeditiously," said Steve Mollenkopf, CEO of Qualcomm.
Regulatory approval is not always quick and easy to come by, especially in deals valued at multi billions of dollars. Be that as it may, Qualcomm's proposed acquisition has received antitrust clearance from eight of the nine required government bodies around the globe. The last remaining regulatory body that needs to approve the deal is the Ministry of Commerce (MOFCOM) in China, and Qualcomm said it is "optimistic" that will happen in the near future.
While regulatory approval seems a foregone conclusion, the bigger question is how will this impact Broadcom's unsolicited bidding for Qualcomm. Broadcom currently has a $121 billion hostile takeover bid on the table and is likely to withdraw that bid if and when the deal to acquire NXP goes through.
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