21 February 2018
Qualcomm agrees increased offer price of $127.50 per share for NXP
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Qualcomm Inc of San Diego, CA, USA says that indirect subsidiary Qualcomm River Holdings B.V. has agreed an increase to $127.50 per share of its cash tender offer to purchase NXP Semiconductors N.V. The amended agreement (approved by the Qualcomm and NXP boards of directors) also lowers the minimum tender condition from 80% of NXP’s outstanding shares to 70%, and extends the expiration time for the offer to the end of 5 March (New York City time).
In addition, Qualcomm River Holdings B.V. has entered into binding agreements with nine NXP stockholders who collectively own more than 28% of the firm’s outstanding shares (excluding additional economic interests through derivatives) to tender their shares at $127.50 per share. These stockholders include funds affiliated with Elliott Advisors (UK) Ltd and Soroban Capital Partners LP.
Qualcomm intends to fund the additional consideration with cash on hand and new debt. The amended tender offer is not subject to any financing condition.
The revised price reflects enhanced current value drivers for NXP, including:
- NXP’s recent performance, including calendar 2017 results that exceeded Qualcomm’s transaction model on revenue, gross margin and EBIT. NXP’s non-GAAP operating income (excluding Standard Products) rose by 20% from calendar 2016 to 2017.
- Strong market dynamics and positive outlook for key segments. NXP’s Auto business has increased revenues by 11% year-over-year. Qualcomm has also significantly improved its own capabilities in key industry segments such as Auto ($3bn revenue pipeline), IoT ($1bn in fiscal-year 2017 sales) and Networking, further enhancing the value proposition of the combined company.
- High confidence in annualized cost synergies of at least $500m resulting from insights gathered during the integration planning process.
“Qualcomm’s leading SoC [system-on-chip] capabilities and technology roadmap, coupled with NXP’s differentiated position in Automotive, Security and IoT, offers a compelling value proposition,” believes Qualcomm’s CEO Steve Mollenkopf. “We remain highly confident in our fiscal 2019 non-GAAP EPS target of $6.75-7.50, which includes $1.50 per share accretion from the acquisition of NXP. With only one regulatory approval remaining, we are working hard to complete this transaction expeditiously. Our integration planning is on track.”
“The acquisition of NXP will enable us to accelerate our growth strategy… This is an attractive acquisition at this price for Qualcomm stockholders based on NXP’s recent strong financial performance, the growth in key strategic areas such as Auto and IoT and our high confidence in management’s ability to execute upon the synergy opportunities,” says Tom Horton, presiding director of Qualcomm’s board.
“NXP is a highly strategic and attractive acquisition for Qualcomm that enhances the value of our leading 5G technologies,” sas Qualcomm’s chairman Dr Paul E. Jacobs. “The revised agreement provides certainty for both Qualcomm and NXP stockholders,” he believes.
Qualcomm’s acquisition of NXP has received antitrust clearance from eight of the nine required government regulatory bodies around the world. The transaction remains contingent on clearance from the Ministry of Commerce (MOFCOM) in China. Qualcomm is optimistic it will receive MOFCOM clearance in the near term.