Qual­comm in new move against Broad­com bid

China Daily (Canada) - - VIEWS - By CHENG YU chengyu@chi­nadaily.com.cn

US semi­con­duc­tor com­pany Qual­comm Inc has an­nounced it will raise its bid to ac­quire Dutch au­to­mo­tive chip maker NXP Semi­con­duc­tors NV to $44 bil­lion, which an­a­lysts see as a key step for the heavy­weight to shore up sup­port for the deal and fend off the hos­tile $121 bil­lion bid from its ri­val Broad­com Ltd.

Un­der the new deal, Qual­comm will pay $127.50 for each NXP share, which will be 16 per­cent higher than the orig­i­nally pro­posed price, and the min­i­mum ten­der con­di­tion has been low­ered from 80 per­cent of NXP’s out­stand­ing shares to 70 per­cent.

Xiang Li­gang, a tele­com vet­eran and CEO of in­dus­try web­site Cc­time, said the new terms in­clud­ing the low­ered thresh­old will make it eas­ier for Qual­comm to com­plete the deal as the re­vised bid is likely to win over in­vestors in­clud­ing El­liott which had Qual­comm’s ini­tial too low.

“If the deal is com­pleted, it will bol­ster Qual­comm’s com­pet­i­tive­ness as it is look­ing for NXP tech­nol­ogy to broaden its prod­uct line be­yond smart­phones to au­to­mo­biles and in­ter­net-con­nected de­vices, and strengthen its prod­ucts Man­age­ment, op­posed of­fer as for next-gen­er­a­tion 5G,” said Roger Sheng, re­search di­rec­tor at con­sul­tancy Gart­ner Inc.

Qual­comm said that the ac­qui­si­tion will be “highly strate­gic and at­trac­tive”.

“The ac­qui­si­tion of NXP will en­able us to ac­cel­er­ate our growth strat­egy ... this is an at­trac­tive ac­qui­si­tion at this price for Qual­comm stock­hold­ers,” said Tom Hor­ton, pre­sid­ing di­rec­tor of the Qual­comm Board of Di­rec­tors.

More im­por­tantly, an­a­lysts pointed out that the new terms will put great pres­sure on its big­gest ri­val Broad­com to de­cide whether it will stick to the orig­i­nal stip­u­la­tion in its bid.

Ear­lier this month, Broad­com made a $121 bil­lion “best and fi­nal of­fer” to ac­quire Qual­comm, but Qual­comm re­jected the re­vised buy­out sug­gest­ing it has “se­ri­ous de­fi­cien­cies in value and cer­tainty”.

“Build­ing mo­men­tum on the NXP deal will strengthen Qual­comm’s de­fenses to Broad­com as it al­lows its share­hold­ers to bet­ter as­sess the stand­alone value of Qual­comm,” added Xiang.

Right af­ter the re­vised price, NXP shares rose 6 per­cent to $125.56, re­flect­ing ex­pec­ta­tions among in­vestors that there are in­creas­ing chances of Qual­comm re­pelling Broad­com.

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