After the nearly 20 months of negotiations and waiting, on July 26, 2018, Qualcomm plans to abandon its plan to acquire Dutch semiconductor company NXP for US$44 billion. US media said Qualcomm will this week The result is that its $44 billion acquisition of chip maker NXP Semiconductors will be one of the biggest victims of the Sino-US trade war escalation.
In the vote in the board election in March this year, Mollenkopf failed to win the support of an absolute majority of shareholders. Over the past four years, Qualcomm's share price has fallen by more than a quarter, while the PHLX semiconductor index has more than doubled. The completion of the acquisition of the NXP transaction is seen as an important step in restoring investor confidence.
Although China's State Administration of Markets still has the opportunity to make a last minute notice before 11:59 pm ET, Qualcomm now considers the possibility of the agreement to be very small.
Well-known insiders revealed that Qualcomm directors have been psychologically prepared for the transaction case. The directors still prefer to abandon the acquisition of NXP if they have not been released by China. For the M&A case has been delayed, Qualcomm investors have become bored and hope to As soon as possible, many people even think that even if the transaction is blown, it can be regarded as a bullish, because the ability of Qualcomm to integrate NXP has been questioned by the market.
Qualcomm's pursuit of NXP's story ended, and it also represented a very chaotic period of Qualcomm. Qualcomm is the world's top communications chip manufacturer, and such chips are mostly used in smartphones and other devices.
Just four months ago, the Trump administration stepped in and prevented Broadcom from investing $117 billion in a hostile takeover of Qualcomm on the grounds that Qualcomm's technology is critical to US national security. Qualcomm is the US in terms of 5G cellular technology research and development. The leading company, this technology will help a series of new products to connect to the wireless network, the White House's intervention actually portrayed Qualcomm as 'the country's heavy enterprise', playing a vital role in the 5G battle with China.
Qualcomm previously believed that the deal with Enpuzhi helped its transformation, allowing Qualcomm's business to extend beyond mobile phones into cars and smart home devices. The deal was announced 12 days before Trump's election as president. If the transaction is not aborted, Qualcomm would have increased its revenue by $9.26 billion last year and about 30,000 employees. Qualcomm's latest fiscal year sales revenue was $22.29 billion, and the number of employees was basically the same.
Qualcomm shares rose more than 5% after the close, to nearly $63, but still not as much as the $69 share of Broadcom's attempt to acquire Qualcomm in January. At the same time, Enpuzhi fell more than 3%, as it is still facing the future. Independent situation.
Isn’t it a good thing to leave the sea of NXP?
Investors will breathe a sigh of relief at the end of the project – the project has suffered setbacks since 2016. Qualcomm has successfully blocked Broadcom’s $117 billion acquisition during this period, and has also been in court with Apple. It is open to the court and faces billions of dollars in fines from antitrust regulators around the world.
Scott Kennedy, a Chinese scholar at the Center for Strategic and International Studies, said that the approval of the Qualcomm and NXP Semiconductors transactions may now make China feel weak. When the overall trade relationship is facing a serious escalation risk, it is difficult to meet this single case. The US has asked. Chinese regulators may come up with some form of conditional approval, forcing Qualcomm and NXP to decide whether they want to further postpone the final result. The US Wall Street Journal reported that if Qualcomm and NXP’s transaction ended in failure, It will fully explain the serious consequences of the Sino-US trade war. So far, this influence has spread in many companies. The Trump administration has imposed tariffs on goods worth more than 34 billion US dollars in various industries in China. In addition, $16 billion worth of goods were subject to tariff review. China has also arbitrarily imposed a 25% tariff on US$34 billion in products and determined to impose additional tariffs on another $16 billion in goods.
Bloomberg said that with the termination of this transaction, the future of Qualcomm and NXP will be full of uncertainty, but for Qualcomm, the bitter sea from NXP is not a good thing. Because Qualcomm has rarely involved automotive and industrial chip fields, Moreover, NXP and Qualcomm are completely different operating modes. This transaction will bring Qualcomm more uncertainty. With the termination of the transaction, Qualcomm will be able to provide a more certain future.
At the earnings meeting, analysts asked why Continuity’s extension of the offer to regulators for more time, Qualcomm CEO Steve Mollenkopf said that Qualcomm needs to provide certainty in addition to new opportunities through mergers and acquisitions. Not only for investors and Partner certainty, also need to give our employees certainty.
He also stressed: 'We intend to terminate the acquisition of NXP after the expiration of today's acquisition offer, waiting for any new progress. According to previous plans, if the agreement is terminated, we will open up to 30 billion US dollars of stock repurchase, Create value for shareholders. '