31 July 2018

Qualcomm abandons $44bn acquisition of NXP in absence of China regulatory approval

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After agreeing in October 2016 for its indirect subsidiary Qualcomm River Holdings B.V. to acquire automotive and Internet of Things (IoT) chip maker NXP Semiconductors N.V. of Eindhoven, The Netherlands for $44bn, telecom chip and mobile processor manufacturer Qualcomm Inc of San Diego, CA, USA has now terminated the deal.

In January, Qualcom said that the acquisition had received eight of the nine approvals required around the world under anti-monopoly provisions – most recently from the European Union and the Korea Fair Trade Commission (KFTC). However, in the absence of regulatory clearance by the China Ministry of Commerce’s State Administration for Market Regulation (SAMR) by the deal’s agreed ‘end date’ of 25 July, Qualcomm River Holdings has now been obliged to pay NXP a termination fee of $2bn (using existing cash and cash equivalents).

As promised to shareholders if the NXP deal fell through, Qualcomm has announced a stock buyback program of up to $30bn. Likewise, NXP has announced a $5bn stock buyback program “based on the significant strength of the NXP capital structure, and its confidence in the company’s ability to drive long-term growth and strong cash flow”.

“Our core strategy of driving Qualcomm technologies into higher-growth industries remains unchanged,” says Qualcomm’s CEO Steve Mollenkopf. The firm continues to achieve strong growth, accelerated by its expansion and momentum in the areas of IoT, Automotive, RFFE, Compute, and Networking. “We will continue to focus on our strong momentum in these growth industries with projected revenues of approximately $5bn for fiscal year 2018, up greater than 70% from fiscal year 2016,” he adds.

“While it is unfortunate that the semiconductor powerhouse that would have resulted from the transaction with Qualcomm could not close after 21 months of diligent efforts by the team, we are confident in our future as an independent market leader and will continue to focus our efforts to drive our long-term strategy in our leadership markets of automotive and secure IoT solutions,” says NXP’s president & CEO Richard Clemmer.

See related items:

Qualcomm agrees increased offer price of $127.50 per share for NXP

Qualcomm’s acquisition of NXP authorized by EC and Korea Fair Trade Commission

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