Having failed to gain regulatory approval from China, Qualcomm abandoned plans to acquire NXP Semiconductor. The original purchase agreement was announced on October 27, 2016. Qualcomm subsequently raised its offer to approximately US$44 billion. The deal gained regulatory approval in the U.S., the European Union, and other regions, however, the authorities in China expressed concern over the effect on competition and ultimately neither approved nor blocked the deal.
Separately, Qualcomm reported revenue of $5.6 billion for its fiscal third quarter ended June 24, 2018.
“We reported results significantly above our prior expectations for our fiscal third quarter, driven by solid execution across the company, including very strong results in our licensing business,” said Steve Mollenkopf, CEO of Qualcomm Incorporated. “We intend to terminate our purchase agreement to acquire NXP when the agreement expires at the end of the day today, pending any new material developments. In addition, as previously indicated, upon termination of the agreement, we intend to pursue a stock repurchase program of up to $30 billion to deliver significant value to our stockholders.”
Qualcomm said that its results have been negatively impacted by its dispute with Apple and its contract manufacturers (who are Qualcomm licensees).
The company did not record revenues in the first nine months of fiscal 2018 or the third or fourth quarter of fiscal 2017 for royalties due on sales of Apple’s products. We expect the actions taken by these companies will continue until these disputes are resolved.
Qualcomm to Acquire NXP — Engines for the Connected World
Qualcomm agreed to acquire all of the issued and outstanding shares of NXP for $110.00 per share in cash, representing a total enterprise value of approximately $47 billion. The deal will be financed through cash on hand and $11 billion in new debt. The companies expect total annualized synergies of $500 million within two years of close.
NXP Semiconductors N.V., which headquartered in Eindhoven, Netherlands, employs approximately 45,000 people in more than 35 countries and is known for its mixed-signal semiconductor electronics. The company was known as Philips Semiconductor prior to 2006.
Key markets include automotive, broad-based microcontrollers, secure identification, network processing and RF power. NXP has a broad customer base, serving more than 25,000 customers through its direct sales channel and global network of distribution channel partners.
For Q3 2016, NXP reported revenue of $2.469 billion, up 4.4% over a year ago, and GAAP gross profit of $1.184 billion, up 7.7% over a year ago.
The combined company is expected to have annual revenues of more than $30 billion, serviceable addressable markets of $138 billion in 2020 and leadership positions across mobile, automotive, IoT, security, RF and networking.
