[Exclusive] China's Silence Sounds Death Knell for Qualcomm's NXP Deal
Guo Liqin
/SOURCE : Yicai
[Exclusive] China's Silence Sounds Death Knell for Qualcomm's NXP Deal

(Yicai Global) July 26 -- Qualcomm's USD44 billion proposed takeover of NXP Semiconductors "is over," a manager at the US chipmaker told Yicai Global less than three hours before a self-imposed deadline to conclude the deal.

The acquisition needed approval in nine jurisdictions. China's anti-monopoly regulator was the only one that hadn't said 'yes.' In fact, it said nothing as the 11.59 p.m. New York deadline came and went. Calling off the deal will cost Qualcomm a USD2 billion termination fee, the largest in the history of semiconductor mergers.

Chief Executive Steve Mollenkopf intends to abort the takeover after the tender offer expired, according to the anonymous manager familiar with the deal. The California-based company will now set in motion a back-up plan to repurchase USD30 billion of its own shares, he added.

The acquisition represented an opportunity for Qualcomm to cut its dependence on the slowing smartphone market and focus more on auto chips.

During an earnings meeting yesterday, an analyst asked whether Qualcomm would renew the offer and give regulators more time. Mollenkopf said the firm needed to provide certainty not only for investors and partners but also for employees by securing new opportunities through mergers and acquisitions.

Qualcomm's offer for the Netherlands-based chipmaker "won't be restarted after it is aborted, because the contractual conditions can't be reversed once they're triggered," the manager said.

An official at China's State Administration for Market Regulation told Yicai Global this morning that they had not received any notice related to the anti-monopoly case, and the situation remained unclear. Due to its classified nature, only people involved in the review know about any actual progress, the same source said yesterday.

In April, China's Ministry of Commerce said it was reviewing the deal, now in its 19th month, and gave preliminary feedback.

Stock Uptick

After news of the company's share buyback plan and better-than-expected quarterly results, Qualcomm's shares [NASDAQ: QCOM] gained almost 1 percent to close at USD59.42.

The Qualcomm-NXP merger may have fallen victim to the China-US trade conflict and US President Trump's scuppering in March of a USD105 billion bid by Singapore-based Broadcom to acquire Qualcomm. Though Broadcom is not Chinese owned and is listed in the US, Trump cited national security concerns for blocking the deal. If the US can block mergers and acquisitions, China can do the same.

China's commerce ministry today declined to comment on whether the Qualcomm-NXP deal had been approved or not, and said the issue wasn't linked to the China-US trade conflict.

China's latest institutional reforms mean a number of anti-trust agencies previously scattered among the Ministry of Commerce, the National Development and Reform Commission, and the State Administration of Industry and Commerce, have been combined into the State Administration for Market Regulation.

In early May, the commerce ministry's anti-monopoly bureau was also merged into SAMR. Yicai Global learned from a number of authoritative sources that the ministry's original team is still responsible for the Qualcomm-NXP merger case.

Editor: Emmi Laine

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Keywords: NXP , Qualcomm , US , M&A , 5G , Trade Dispute , US-China , Semiconductors