What: Shares of NXP Semiconductors (NASDAQ:NXPI) gained 19.3% in November, according to data from S&P Capital IQ. It was a sharp reversal from NXP's 10% plunge in October, made possible by the final approvals of the chip maker's $16.7 billion merger with sector peer Freescale.
So what: Near the end of October, NXP reported third-quarter results disappointing enough to make investors lose faith in the game-changing Freescale acquisition. So when regulators in China and the U.S. finally gave their final thumbs-up to the transactions involved, it was like removing a heavy weight from the stock's hunched shoulders.
Boosted by these approvals, NXP shares rose 17% in the last week of November.
Now what: The merger has now officially closed, and the resulting company will keep NXP's name and be headquartered on NXP's Einhoven, Netherlands, campus.
The combined company will boast annual sales in the $10 billion range, mostly in the automotive and microcontroller markets. Automotive strength makes the new NXP a leader in an attractive high-growth market, and the microcontroller focus traces a path directly into the Internet of Things megatrend.
The companies were aiming for a combined enterprise value of roughly $40 billion when the deal was announced nine months ago. They ended November at a combined enterprise value of $41.2 billion.
The company now plays very much in the same league as Texas Instruments (NASDAQ:TXN) and Avago Technologies (NASDAQ:AVGO), often competing with these chip titans for the very same IoT and automotive contracts. The semiconductor sector is simplifying, but high-powered rivalries are not going away.
"Through this merger we have created an industry powerhouse focused on the high growth opportunities in the Smarter World, capitalizing on the emerging opportunities offered by the accelerating demand for connectivity, processing and security," said NXP CEO Rick Clemner in a press statement.
Credit rating experts agree, upgrading NXP's creditworthiness across the board based on the economies of scale and retirement of Freescale debt.