Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

Will Qualcomm Have to Increase Its NXP Semiconductors Buyout Offer?

By Anders Bylund - Jun 1, 2017 at 10:00AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Another humdrum progress report on Qualcomm's tender offer was interrupted by activist investors looking for a bigger payoff.

Another month has come and gone, which means it's time for Qualcomm ( QCOM -0.29% ) to reaffirm its all-cash tender offer for shares of NXP Semiconductors ( NXPI 1.97% ). The number of properly tendered shares fell again, landing at 14.1% of NXP's total share base, but for once, that's not the whole story.

This time, activist investors are elbowing in with the goal of scoring a bigger payout.

Qualcomm's tender offer by the numbers

Just in case you forgot how NXP's shareholders have been approaching Qualcomm's tender offer, here's a quick reminder:


NXP Shares Tendered

% of Shares Tendered


47.7 million



50.3 million



54.8 million



58.0 million



49.6 million


Data source: NXP Semiconductors.

This report showed the lowest number of tendered shares since Qualcomm started publishing its progress reports. This particular offer will expire on June 28, 2017, unless terminated or extended before then. The companies also reported more activity related to getting official merger approvals in markets like Mexico, Taiwan, and Japan. So far, so good -- just another step toward closing the deal before the end of 2017.

The activist investor wildcard

Normally, that would be the end of the story. But it isn't necessarily that simple this time around.

According to separate reports from Bloomberg and CNBC, a group of activist investors led by Elliott Management are preparing to ask NXP's leadership for higher bid. Qualcomm's current offer of $110 per NXP share is starting to look timid next to the steady march of the overall market.

"If you talk to large investors, as I have, many of them think that NXP could get a higher price on its own," said CNBC reporter David Faber in his on-screen report.

NXP's share prices have been pinned to that $110 target price since last September while the company's business kept reaching new heights. As a result, NXP now trades at a discount relative to its close competitors, whether you measure their worth by price-to-book, price to free cash flow, or enterprise value to EBITDA profits.

Puzzle pieces emblazoned with Qualcomm and NXP logos.

Image source: Getty Images, NXP, and Qualcomm, edited by the author.

What's next?

There is no guarantee that NXP's management will act on Elliott Management's advice, unless the firm has built a large stake in the company very recently. At the end of March, Elliott was not listed among the 15 largest institutional holders of NXP stock.

That being said, investors are warming up to the idea of a more profitable exit strategy. NXP shares closed Wednesday's trading session at $109.89, just pennies below the promised $110 buyout price. If Elliott alone can't force NXP's hand, a groundswell of shareholder support for its program just might.

Qualcomm has been busy setting up the financial framework for its planned $27 billion buyout and the assumption of NXP's $4.3 billion in net debts. Stretching the price tag even further might force Qualcomm to take on more debt of its own, or require it to inject a slice of share-based compensation into the current all-cash deal.

Again, things could certainly cool down from here, but it's starting to look like Qualcomm will have to adjust its NXP buyout offer. Walking away at this point does not look like a strong option, because Qualcomm is betting a lot on the large shadow NXP casts over the automotive computing market.

Stay tuned for further updates.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

NXP Semiconductors N.V. Stock Quote
NXP Semiconductors N.V.
$227.12 (1.97%) $4.39
QUALCOMM Incorporated Stock Quote
QUALCOMM Incorporated
$176.51 (-0.29%) $0.52

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/05/2021.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Our Most Popular Articles

Premium Investing Services

Invest better with the Motley Fool. Get stock recommendations, portfolio guidance, and more from the Motley Fool's premium services.