ZCZC
BCN-14
US-IT-MERGER-QUALCOMM-NXP
Qualcomm says it will drop $43 bn bid for Dutch chip rival NXP
WASHINGTON, July 26, 2018 (BSS/AFP) – US computer chip giant Qualcomm said
Wednesday it was set to drop a $43 billion acquisition of Dutch rival NXP
after failing to win approval of antitrust authorities in China.
Qualcomm’s chief executive Steve Mollenkopf said the California firm would
end its effort when the bid expires at 11:59 pm Eastern time (0359 GMT)
barring any “new material developments.”
The move comes amid increasing trade tensions between the United States
and China.
Qualcomm had extended the deadline several times for the tie-up which
would have given the dominant smartphone chipmaker firm a broader array of
products including sensors and microprocessors for connected “internet of
things” devices.
It also raised its bid — from $110 to $127 a share — in February, to the
irritation of fellow chipmaker Broadcom, which itself recently had a hostile
bid for Qualcomm blocked by the White House.
Washington said the acquisition of Qualcomm by Broadcom — now Singapore-
based — would help Chinese competitors such as Huawei, particularly in the
emerging 5G blazing fast wireless internet, where a stronger China could
present a national security issue.
According to Qualcomm, the acquisition of NXP has received antitrust
clearance from eight of the nine required government regulatory bodies around
the world, with the matter still pending in China — suggesting the takeover
may be a collateral victim of US-China trade tensions.
“We intend to terminate our purchase agreement to acquire NXP when the
agreement expires at the end of the day today, pending any new material
developments,” Mollenkopf said in a statement with the company’s quarterly
earnings.
“In addition, as previously indicated, upon termination of the agreement,
we intend to pursue a stock repurchase program of up to $30 billion to
deliver significant value to our stockholders.”
The company also said it expected to pay NXP a $2 billion breakup fee.
Based in the Dutch town of Eindhoven, NXP is a leading maker of chips for
the auto industry, as well as for contactless payment systems.
A former division of the Dutch electronics giant Philips, it became
independent in 2006.
Qualcomm said profit rose 41 percent from a year ago to $1.2 billion while
revenues edged up four percent to $5.6 billion.
BSS/AFP/HR/1010