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Is Qualcomm's Grip on NXP Semiconductors Getting Any Tighter?

By Anders Bylund - Dec 15, 2017 at 3:37PM

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Investors aren't exactly rushing to complete this $38 billion buyout, but Qualcomm still hopes to complete the deal within a few months.

Chip giant Qualcomm (QCOM -3.30%) has updated its tender offer for every share of automotive computing expert NXP Semiconductors (NXPI -1.31%) again. The number of shares committed to Qualcomm's $110 all-cash offer per NXP share saw a slight recovery in October after several months of steady declines, then dipped to new lows in November. What's new in the December report?

Let's have a look.

By the numbers

When NXP shareholders commit their stubs to Qualcomm's offer, the shares may be withdrawn at any time. Shares tendered so far:

Offer Update

NXP Shares Tendered

% of Shares Tendered

December

6.6 million

1.9%

November

8.1 million

2.4%

October

12.3 million

3.6%

September

10.9 million

3.2%

August

23.5 million

6.9%

July

25.6 million

7.6%

June 28

42.2 million

12.5%

June 1

47.7 million

14.1%

May

50.3 million

14.9%

April

54.8 million

16.3%

March

58.0 million

17.2%

February

49.6 million

14.8%

Data Source: Qualcomm.

What's new?

Once again, Qualcomm simply reported the updated numbers without any commentary or background material. The report contained no news regarding the NXP deal's pending regulatory reviews in Europe and China.

"While the parties are working diligently to promptly complete the transaction, the parties now expect the closing to occur in early 2018," the press release stated. That's a slight shift from November's stance, where the two companies continued to expect a closing by the end of 2017 but admitted that the deal just might slip into the next year.

Beyond this, the only additional detail would be the fact that this extension of the tender offer will expire at the close of business on Jan. 12, 2018. So I expect another extension on Jan. 13, assuming that the deal neither closed nor collapsed before that date.

Two men standing on a wooden deck, trying to fit together two large puzzle pieces emblazoned with the Qualcomm and NXP logos.

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

What else?

Looking beyond today's official statement, the Qualcomm-NXP deal continues to make headlines elsewhere.

Activist investment firm Elliott Advisors, which has a 6% economic interest in NXP's stock, has continued to push for a higher buyout price. The firm believes that NXP should be worth $135 per share today, 23% above Qualcomm's cash bid of $110 per share. This estimate would be for NXP Semiconductors as a stand-alone business, not including any buyout premium to sweeten the deal.

"Approximately half of NXP's revenue is exposed to exciting growth engines of the semiconductor market -- automotive and industrial," Elliott said in a letter to NXP shareholders. "We believe NXP shareholders have the opportunity to unlock a material valuation gap that exists today."

Qualcomm immediately struck back at Elliott's rhetoric, calling it an "unsupportable" attempt to further Elliott's "self-serving agenda." Let's just say that Qualcomm isn't overly excited about the idea of boosting this $38 billion price tag any further.

Meanwhile, fellow mobile chip giant Broadcom (AVGO -1.64%) has turned its $105 billion buyout offer for Qualcomm into an all-out hostile takeover play. Broadcom has filed an alternative slate of directors to be considered at Qualcomm's next annual meeting in early March. The company wants to buy Qualcomm "whether Qualcomm's pending acquisition of NXP Semiconductors is consummated on the currently disclosed terms of $110 per NXP share or is terminated."

That's where NXP and Qualcomm stand at the end of 2017: Nothing new, except that everything is becoming more complicated as time goes by.

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Stocks Mentioned

NXP Semiconductors N.V. Stock Quote
NXP Semiconductors N.V.
NXPI
$146.09 (-1.31%) $-1.94
QUALCOMM Incorporated Stock Quote
QUALCOMM Incorporated
QCOM
$123.53 (-3.30%) $-4.21
Broadcom Limited Stock Quote
Broadcom Limited
AVGO
$477.84 (-1.64%) $-7.97

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