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Qualcomm Preparing To Close Deal With NXP Semiconductors

By Victor Thomson , Oct 07, 2016 03:30 AM EDT
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Mobile chipmaker Qualcomm is preparing to close a deal for the acquisition of Dutch chip manufacturer company NXP Semiconductors.

Qualcomm To Acquire NXP

According to reports, San Diego-based Qualcomm is the only company interested to buy NXP at this moment and the only company in negotiations with NXP over the acquisition deal. In fact, the list of chip companies that could afford buying NXP Semiconductors is very short.

The two companies did not agree yet over the financial details of the deal. Netherlands-based NXP is asking for about 120 a share, or an amount of around $41 billion. Qualcomm is willing to offer near 110 a share, or approximately $35 billion., according to Bloomberg.

While NXP wants all cash, Qualcomm is targeting a deal structure of 25 percent stock and 75 percent cash. Talks with NXP are in early stages and Qualcomm is still considering its options.

The sides are closing that gap, however, and the negotiations are moving towards closing the deal. Insider sources disclosed for the online publication that both parties are interested in reaching an agreement.

If the Qualcomm acquisition offer will be successful, then the deal would create the second-largest chip company by revenue in the industry, after Intel.

Qualcomm would take advantage of an eventual acquisition of NXP by diversifying beyond mobile-phone chips. The company would gain exposure to the Internet of Things, industrial and automotive markets.

Stock Market Reaction

According to the online publication Investors, NXP stock went as much as 2.7 percent high on the stock market on Thursday, Oct. 6, on the news about the upcoming acquisition. However, after the initial report, NXP stock ended at 103.49, up 1 percent for the day. In the meantime, Qualcomm stock rose to 67.54, up by 1.1 percent on Thursday.

Since news reports about a possible merger between the two semiconductor companies first broke last week, NXP stock has soared over 25 percent. Over the same period, Qualcomm stock is up 6 percent.

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