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Jul 25, 2018

Qualcomm Expects to Call Off $44 Billion Deal for NXP Semiconductors I Business I DealBook I NYT

nytimes.com

Qualcomm Expects to Call Off $44 Billion Deal for NXP Semiconductors



Qualcomm has been awaiting regulatory approval from China to complete its $44 billion acquisition of NXP Semiconductors.CreditChina Network/Reuters
SAN FRANCISCO — Qualcomm said it planned to call off its $44 billion deal to buy NXP Semiconductors by the end of Wednesday unless Chinese regulators approved it. The chip maker added that it would buy back $30 billion of its stock if the acquisition was terminated.
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Steve Mollenkopf, the chief executive of Qualcomm, which gave Chinese regulators until the end of Wednesday to approve the deal.CreditSteve Marcus/Reuters
The transaction may become an unintended casualty of the trade war between the United States and China. Washington recently leveled tariffs on numerous Chinese goods, and trade experts said the Chinese authorities appeared to be withholding approval of the Qualcomm deal to gain negotiating leverage in retaliation. Eight other jurisdictions, including the United States, had already approved Qualcomm’s purchase of NXP; China was the exception.
The developments followed actions by President Trump to aid Qualcomm this year. In March, he blocked a $117 billion hostile takeover bid for Qualcomm by a rival chip maker, Broadcom, after a federal committee said an acquisition would reduce research spending on wireless technology essential to national security.
Qualcomm announced the joint decision with NXP along with its quarterly earnings on Wednesday afternoon. The deadline for consummation of the deal is midnight Eastern time.
“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,” Qualcomm said in a statement, adding that it planned to pursue a stock buyback of up to $30 billion.
If the deal falls apart, it will be a setback for Qualcomm. The company, based in San Diego, is expected to immediately have to pay NXP a $2 billion breakup fee for failing to win regulatory approval for the transaction.
More broadly, Qualcomm must convince shareholders that it can expand its business without the Dutch-based chip maker, which was expected to speed Qualcomm’s expansion into chips for cars, mobile payments and other applications.