Yahoo Finance Qualcomm drops $44bn takeover of NXP as China-US tensions mount
Qualcomm has scrapped plans for a $44 billion takeover of NXP Semiconductors after China failed to grant approval for the deal, amid growing tensions over trade.
In the latest sign of a growing trade spat between Washington and Beijing, the world's largest smartphone chipmaker, America's Qualcomm, confirmed in a statement earlier that the deal, which was first announced in 2016, had been terminated.
"Qualcomm River Holdings has terminated its previously announced cash tender offer to acquire all of the outstanding shares of NXP," the company said in a statement, referring to a wholly owned subsidiary of Qualcomm.
It would have been the biggest semiconductor deal globally and its collapse is likely to exacerbate growing trade tensions between the US and China. The deal from San Diego-based Qualcomm had been approved by eight other regulators around the world but authorities in Beijing had dragged their heels on a decision for much longer than anticipated.
As a deadline for Chinese regulatory approval elapsed at midnight New York time last night there was no sign of an any decision from China's State Administration for Market Regulation (SAMR), the country's powerful antitrust regulator. Without the agency's approval, the deal could not be completed.
Analysts had feared the deal had become snagged after the US administration repeatedly threatened a trade war with China. China's commerce ministry declined to comment earlier today.
The unraveling of the takeover of NXP, a Dutch company, is likely to prove expensive for Qualcomm, which will now have to fork out $2 billion as a break fee.
It also leaves Qualcomm, which is strong in the mobile processor and modem sectors, heavily reliant on its existing product portfolio at a time when it is under growing pressure around the world over anti-competitive patent licensing practices. The market for smartphones has also stagnated in recent years, forcing Qualcomm to look out for new areas of growth.
The proposed acquisition of NXP, announced in October 2016, was designed to refresh its range of chips and would have given it a new toehold in the growing market for semiconductors for the automotive and security markets, in which NXP maintains a strong position.
Steve Mollenkopf, Qualcomm’s chief executive, told a conference call late on Wednesday:
"The decision for us to move forward without NXP was a difficult one . . . To say the least, the 21 months since we announced the NXP acquisition have been volatile.”
He also expressed confidence about going it alone as an independent manufacturer.
"We are confident in our ability to grow... We didn’t see an end to the process, or near-end end to the process, so we had to move on.”
Qualcomm had been forced to raise its offer for NXP in February after activist investors took a stake in the Dutch chipmaker.
