Qualcomm Inc raised its offer for NXP Semiconductors NV and said it cut a deal with holders, in a bid to close a transaction that might be crucial to its own efforts to fend off a hostile approach by Broadcom Ltd.
The San Diego-based chipmaker raised its offer by 16 percent from US$110 a share to US$127.50 a share to an equity value of about US$43 billion. That was enough to secure support from holders, including activist Elliott Management Corp, of about 28 percent of NXP’s stock, it said.
That likely removes the opposition of a crucial block of shareholders who have piled into the stock demanding a higher price.
Qualcomm itself is the subject of what would be the largest takeover in the history of technology deals. Its suitor, Broadcom, said its US$121 billion bid is contingent on the NXP deal going through at originally agreed price.
Qualcomm has rejected Broadcom’s approaches, provoking its would-be purchaser into nominating board members in a move aimed at appealing directly to its shareholders in a March 6 vote.
However, Qualcomm’s move might not end Broadcom’s attempt to purchase it, said Sanford C. Bernstein & Co analyst Stacy Rasgon, who predicted the deal would go to a shareholders’ vote.
“We don’t think they toss it and walk though,” Rasgon wrote in a note following the announcement. “We would hope for further engagement between the two companies, though their sit-down together last week does not appear to have been incredibly fruitful, so we aren’t holding our breath.”
Qualcomm also secured the agreement of NXP to the minimum threshold needed to win approval for its purchase to 70 percent of holders, the US company said in a statement on Tuesday.
It said the higher bid allowed it to reach binding agreements with nine investors who own 28 percent of NXP shares.
Qualcomm executives raised the offer price because the Dutch company’s earnings have improved ahead of expectations in the more than a year it has taken the transaction to work its way through regulatory approval, according to the statement.
The deal, first announced in 2016, is aimed at jump-starting Qualcomm’s efforts to expand its industry-leading mobile phone technology into new markets, such as automotive.
Elliott, which owns a 7.2 percent stake in NXP, has said it believed company’s standalone value was US$135 a share.
On Tuesday, the New York-based hedge fund said it had entered into an agreement to support the new transaction.
“Elliott believes that today’s announcement reflects a positive outcome for all NXP shareholders and is pleased that the company’s value has been recognized in the revised transaction terms,” the hedge fund said in a statement.
Broadcom CEO Hock Tan (陳福陽) has said the takeover of NXP would not solve Qualcomm’s problems, and he wants it to focus on what it is good at.
Qualcomm, whose modem chips connect the majority of the world’s largest smartphones to cellular networks, said the deal for NXP has won approval from eight of nine required government regulatory bodies.
Approval is still needed from the Chinese Ministry of Commerce.
Qualcomm said it is “optimistic” it will receive clearance in the “near term.”
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