Qualcomm today said it wouldn’t extend its offer to buy NXP for $44 billion today as part of its release for its quarterly earnings, and instead be returning $30 billion to investors in the form of a share buy-back.
So, barring any last-second changes in the approval process in China or “other material developments”, the deal is basically dead after failing to clear China’s SAMR. As the tariff battle between the U.S. and China has heated up, it appears the Qualcomm/NXP deal — one of the largest in the semiconductor industry ever — may be one of its casualties. The White House announced it would impose tariffs on Chinese tech products in May earlier this year, kicking off an extended delay in the deal between Qualcomm and NXP even after Qualcomm tried to close the deal in an expedient fashion. Qualcomm issued the announcement this afternoon, and the company’s shares rose more than 5% when its earnings report came out.
“We reported results significantly above our prior expectations for our fiscal third quarter, driven by solid execution across the company, including very strong results in our licensing business,” Qualcomm CEO Steve Mollenkopf said in a statement with the report. “We intend to terminate our purchase agreement to acquire NXP when the agreement expires at the end of the day today, pending any new material developments. In addition, as previously indicated, upon termination of the agreement, we intend to pursue a stock repurchase program of up to $30 billion to deliver significant value to our stockholders.”
Today’s termination also marks the end of another chapter for a tumultuous couple of months for Qualcomm. The White House blocked Broadcom’s massive takeover attempt of Qualcomm in March earlier this year, and there’s the still-looming specter of its patent spat with Apple. Now Qualcomm will instead be returning an enormous amount of capital to investors instead of tacking on NXP in the largest ever consolidation deal in the semiconductor industry.
By Matthew Lynley