Qualcomm has announced that Qualcomm River Holdings, an indirect wholly-owned subsidiary of Qualcomm, has reached an agreement with NXP Semiconductors to increase to US$127.50 per share its previously announced cash tender offer to purchase all outstanding shares of NXP. The amended agreement, which was approved by the boards of directors of both Qualcomm and NXP, also lowers the minimum tender condition from 80% of NXP's outstanding shares to 70%.
Qualcomm also announced that Qualcomm River Holdings has entered into binding agreements with nine NXP stockholders who collectively own more than 28% of NXP's outstanding shares to tender their shares at US$127.50 per share. These stockholders include funds affiliated with Elliott Advisors (UK) Limited and Soroban Capital Partners LP, according to Qualcomm.
Qualcomm said the revised price reflects enhanced current value drivers for NXP. NXP's recent performance, including calendar 2017 results that exceeded Qualcomm's transaction model on revenue, gross margin and EBIT. NXP's non-GAAP operating income (excluding standard products) increased 20% from calendar 2016 to 2017. NXP's automotive business has increased revenues by 11% year over year.
Qualcomm said it has also significantly improved its own capabilities in key industry segments such as automotives (US$3 billion revenue pipeline), IoT (US$1 billion in FY2017 sales) and networking, further enhancing the value proposition of the combined company to its customers and stockholders.
Steve Mollenkopf, CEO of Qualcomm, said, "Qualcomm's leading SoC capabilities and technology roadmap, coupled with NXP's differentiated position in automotive, security and IoT, offers a compelling value proposition. We remain highly confident in our fiscal 2019 non-GAAP EPS target of US$6.75-US$7.50, which includes US$1.50 per share accretion from the acquisition of NXP. With only one regulatory approval remaining, we are working hard to complete this transaction expeditiously. Our integration planning is on track and we expect to realize the full benefits of this transaction for our customers, employees and stockholders."
Tom Horton, presiding director of the Qualcomm Board of Directors, said, "The acquisition of NXP will enable us to accelerate our growth strategy. The board unanimously believes this is an attractive acquisition at this price for Qualcomm stockholders based on NXP's recent strong financial performance, the growth in key strategic areas such as auto and IoT and our high confidence in management's ability to execute upon the synergy opportunities."
Qualcomm's acquisition of NXP has received antitrust clearance from eight of the nine required government regulatory bodies around the world. The transaction remains contingent on clearance from the Ministry of Commerce (MOFCOM) in China. Qualcomm said it is optimistic it will receive MOFCOM clearance in the near term. |