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Qualcomm will abandon the acquisition of NXP Semicondutors if no approval from China before July 25,2018
Time:2018-07-20 Views:158
Qualcomm has not approved Qualcomm’s acquisition because the China‘s Ministry of Commerce is concerned that the merger of the two companies will help Qualcomm expand its patent licensing business to mobile payments and driverless. In order to wait for the review of the Ministry of Commerce of China, Qualcomm has extended the validity period of the transaction dozens of times.
On July 18th (July 19th, Beijing time), Qualcomm CEO Steve Mollenkopf publicly stated that Qualcomm is still waiting for China‘s Ministry of Commerce to approve its acquisition of NXP Semiconductors.
Morankopf said: "We hope to complete the deal."
According to the agreement, Qualcomm will not be able to complete the transaction without the approval of the Chinese Ministry of Commerce, and will need to pay NXP Semiconductors a $2 billion cancellation fee.
Morenkopf also said that if the approval of the Chinese Ministry of Commerce is not available before July 25, the transaction will be abandoned.
In October 2016, Qualcomm announced the acquisition of NXP Semiconductors for approximately US$38 billion, or approximately US$110 per share. Later, with the rising share price of NXP Semiconductors, the company‘s shareholders believed that Qualcomm‘s offer was too low. In February of this year, Qualcomm raised its offer to $127.50 per share, or about $44 billion.
According to analyst estimates, after the completion of the merger of Qualcomm, Qualcomm will help Qualcomm to quickly enter the automotive, commercial, industrial markets, while improving the bargaining power of the foundry industry. And assist Qualcomm to obtain the main customer base in these markets in the shortest possible time. In this case, in the case of weak growth momentum in the smartphone market and a gradual decline in mobile phone profits, it will help to spread Qualcomm‘s market risk.
However, because NXP‘s expertise in automotive or industrial electronics and safety applications has a long life cycle and rigorous regulations, this is in stark contrast to Qualcomm‘s leading smartphone product features, and future combined supply chain management. It is bound to be the primary challenge.
To complete the transaction, Qualcomm needs to be approved by nine national regulatory authorities around the world. So far, Qualcomm has obtained approval from eight of them, only to be approved by the Chinese Ministry of Commerce. In order to wait for the review of the Ministry of Commerce of China, Qualcomm has extended the validity period of the transaction dozens of times.
If you abandon the acquisition, it will definitely affect the stock price to a large extent. Of course, Qualcomm also has a backup plan, which is to buy back 20 billion to 30 billion US dollars of stock to boost the company‘s stock price.