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NXP, Qualcomm, Broadcom set to run and run

With the left hand, Qualcomm is trying to fend off unwanted advances from Broadcom. With the right hand, it’s trying to complete its planned acquisition of NXP; a transaction which has been dragging on since the offer was first made in October 2016.

And the right hand isn’t doing very well. The offer which was on the table was for $110 per NXP, making the company worth about $38billion. It also wanted 80% of shareholders to accept the deal. Now, the offer has been increased to $127.50 per share, valuing NXP at $44bn, while the shareholder acceptance bar has been dropped to 70%.

It would be fair to say that NXP’s shareholders haven’t rushed headlong into taking the Qualcomm shilling. One reason is that many believe that Qualcomm had undervalued NXP and that they are better off as things stand.

Qualcomm, on the other hand, is keen to get the deal done; evidenced by the fact it now only wants 70% of shareholders to sign on the dotted line. Why? Could it have something to do with Broadcom? Qualcomm is currently deflecting Broadcom’s advances on the basis that the latter’s offer – $121bn – undervalues the company. It is also taking advantage of the belief that Broadcom may not want the NXP element of Qualcomm; something that is reinforced by Broadcom reducing its offer by $3 per share if the NXP deal completes.

You have the feeling – as a legendary show business correspondent once said about a play – this one will run and run.

Graham Pitcher

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