Qualcomm, Broadcom and NXP are on a boat. Broadcom wants to acquire Qualcomm, Qualcomm wants to acquire NXP. While Qualcomm has planned on buying NXP for over a year, NXP shareholders were a bit disappointed by Qualcomm’s initial price.
Qualcomm just raised its bid and is now willing to pay $127.50 per share instead of $110 per share. It values NXP at $44 billion instead of $38 billion.
There are a few reasons why it matters. First, NXP is getting a sweet deal, as Qualcomm doesn’t really have a choice. By closing this acquisition, Broadcom has to pause for a second and think again about acquiring Qualcomm. And Qualcomm has been dragging its feet ever since Broadcom showed some interest in Qualcomm.
A group of NXP shareholders led by hedge fund Elliott Management has already agreed to the new terms. NXP manufactures a bunch of different chips, but there’s one area that is particularly interesting. Qualcomm plans to get serious about the automotive space thanks to NXP chips.
Qualcomm has been manufacturing systems-on-a-chip for Android phones as well as modems and other communications chips. In addition to this semiconductor business, Qualcomm earns quite a bit of money from patent licensing deals. But Apple, South Korea and others don’t want to pay those fees anymore.
That’s why Broadcom has been looking at a potential Qualcomm acquisition for a few months now. After raising its offer multiple times, Qualcomm declined a $121 billion bid.
But it looks like Broadcom is not giving up as the company hired an independent proxy advisory firm called Institutional Shareholder Services to look at the deal. And this firm says Qualcomm shareholders should definitely consider selling to Broadcom. ISS recommends electing four Broadcom persons to Qualcomm’s 11-person board. It could greatly accelerate the talks.
Qualcomm’s annual shareholder meeting should take place on March 6. There will probably be a lot of discussions behind the scenes before the big meeting.