Although the deadline for this transaction has been extended in order to obtain approval from Chinese regulators, Qualcomm has not waited for a 'YES'. Previously Qualcomm has obtained approval from eight major global market regulators including the US and EU, China. Became the last gatekeeper to decide on this $44 billion marriage.
On July 26, China's Ministry of Commerce spokesperson Gao Feng said at a regular press conference that the specific case of Qualcomm's acquisition of NXP can be detailed to the State Administration of Market Supervision. 'The case is an anti-monopoly law enforcement issue, and US economy and trade have nothing to do.'
For Qualcomm, this is obviously a sad ending. Not only has the 20-month effort to run the transaction become futile, but it has also had to pay $2 billion in 'breakup fees.' More importantly, Qualcomm's diversified development, cut into cars. The ambitious blueprint in the field of Internet of Things has suffered major setbacks.
'高帅富' Qualcomm's 'Bai Fumei' NXP
Looking back at Qualcomm's acquisition process, it can be described as long and long.
As early as October 2016, Qualcomm proposed a proposal for the acquisition of NXP.
Qualcomm, the trading party, is currently the global mobile phone chip leader, accounting for more than 40% of the global mobile phone chip share. For a long time, Qualcomm has been lying on the Qualcomm tax to make money. For Chinese mobile phone brands, whether or not to use Qualcomm chips, It pays the patent fee. Previously, Qualcomm had a 3.5% of the smartphone's three-mode model, and the five-mode model received a patent fee of 5% of the whole machine. After the National Development and Reform Commission intervened in 2015, it was revised to For mobile phones used and sold in China, the patent license fee is charged at 65% of the net wholesale price of the whole machine. 'It can be said that Qualcomm is a veritable 'Gao Fu Shuai', but it also left the notoriety of 'patent rogue'.
The other side of the deal, NXP, is a semiconductor company from the Netherlands. Although not as good as Qualcomm, NXP is also famous. Its predecessor was the Philips Semiconductors division. It was separated from Philips in 2006 and is now the world's largest car. Semiconductor company, which provides products and solutions in the fields of automotive electronics, smart identification, home entertainment, mobile phones and personal mobile communications, and multi-market semiconductors, is the top ten semiconductor companies in the world.
More importantly, Qualcomm and NXP are highly complementary. For Qualcomm, the global smartphone market is already saturated, and Qualcomm must expand its business. Once Qualcomm acquires NXP, its business will expand to automotive electronics. In the areas of identification, radio frequency and other fields, Qualcomm is likely to copy the 'high-pass tax' model in the mobile phone field to smart cars, Internet of Things and other fields.
In early July, Qualcomm senior engineering vice president and technology licensing business (QTL) legal adviser Chen Liren disclosed Qualcomm's charging standards for the autonomous driving and Internet of Things sectors. Among them, the automatic driving will be based on the price of the communication device MTU in the car. A license fee of no more than 5% is charged. IoT devices are referenced by the M2M module, and the cost per unit is 50 cents.
After 20 months of hard work, the $44 billion deal was yellow.
It is for the ambition of the entire Internet of Things, for the acquisition of NXP, Qualcomm shows the momentum that is determined to win.
In the purchase price, Qualcomm showed enough sincerity. After the initial proposed purchase price of about 38 billion US dollars was rejected by NXP shareholders, Qualcomm raised the purchase price to 44 billion US dollars.
At the same time, due to the monopoly of the acquisition, the transaction requires the approval of the world's major market regulators. In this transaction, Qualcomm needs to convince the United States, the European Union, China, South Korea, Japan, Russia and other nine global antitrust agencies. Permission.
On January 18 this year, Qualcomm announced that South Korea and the European Union approved the transaction, which means that only China has not made a decision. According to Qualcomm's fiscal year 2017 financial report, 65% of Qualcomm's $22.3 billion in revenue comes from the Chinese business. In other words, Qualcomm cannot bypass the Chinese regulatory authorities to complete the transaction.
However, the approval of this transaction has experienced a delay of more than half a year in China. During the period, there were several media reports that Chinese regulators had agreed to the Qualcomm NXP transaction, but were subsequently falsified.
In order to wait for China's permission order, Qualcomm has repeatedly extended the tender offer time for NXP. New York time on July 25th at 23:59 (Beijing time on July 26th at 11:59) became the final deadline.
At the earnings meeting on July 25th, local time, some analysts asked why Qualcomm CEO Steve Mollenkopf said: "Qualcomm not only passed, but why not continue to extend the offer to regulators for more time." While M&A seeks new opportunities, it also needs to provide certainty, not only to determine the nature of investors and partners, but also to give employees certainty.
According to the "Organizational Reform Plan of the State Council" passed in March this year, the anti-monopoly law enforcement agencies dispersed in the Ministry of Commerce, the National Development and Reform Commission, and the State Administration for Industry and Commerce have been unified in the State Administration of Market Supervision. In mid-May, the Anti-Monopoly Bureau of the Ministry of Commerce of China Also officially merged into the newly established State Market Supervisory Administration. According to the previous news of the First Financial News, the original team of the Ministry of Commerce was responsible for the progress of the case.
The performance exceeded expectations, launching a $30 billion repurchase program
On July 25, local time, Qualcomm released its third-quarter earnings for fiscal year 2018. The financial report showed that Qualcomm's total revenue for the quarter was $5.6 billion, a 4% increase from the $5.4 billion in the same period last year, exceeding expectations; Net profit was $1.2 billion, up 41% from $900 million in the same period last year; diluted earnings per share were $0.82, an increase of 41% compared to $0.58 in the same period last year.
From the perspective of various business segments, CDMA Technology Group, which produces device chips such as mobile phones, generated revenue of US$4.087 billion in the second quarter, up 1% from US$4.052 billion in the same period last year, compared with US$3.897 billion in the previous quarter. 5%. Qualcomm CFO George Davis said in the earnings conference that the department's performance reflects the 'strong demand' of Chinese equipment manufacturers and Apple's 'demand is falling'.
Qualcomm Technology Authorized Group's second-quarter revenue was $1.465 billion, a 25% increase from the $1.172 billion in the same period last year and a 16% increase from the previous quarter's $1.26 billion.
Qualcomm expects revenue for the next quarter to be between $5.1 billion and $5.9 billion. Not in accordance with US GAAP, diluted earnings per share are expected to be 75 cents to 85 cents.
Steve Morenkov said: 'The third-quarter results far exceeded our expectations, thanks to strong implementation of the entire company, including strong performance of the technology licensing business. Our acquisition of NXP's agreement will At the end of today (US time), if we do not receive any new information at that time, we plan to terminate the acquisition agreement. In addition, after the termination of the agreement, we will start up to 30 billion US dollars of stock repurchase plan according to the previous plan, for our Shareholders provide great value. '