Friday, October 21, 2016
Qualcomm is reportedly nearing a massive deal to buy NXP Semiconductors
Qualcomm is nearing a deal to buy NXP Semiconductors, according to Alex Sherman and Ian King at Bloomberg.
The tech giant is in the final stages of negotiations to buy the company in what could be an all-cash deal for $110 to $120 per share, the report said.
NXP's share price jumped a little more than 3% on the news, from around $100.70 to $104 per share. Qualcomm jumped around 2.5%, to $67.46. The share price reaction suggests that both NXP's shareholders — and, critically, Qualcomm's investors — like the idea of a deal.
Qualcomm now has a market cap of around $99 billion, while NXP has a market cap of around $36 billion. The deal would be the largest in the history of the semiconductor industry, according to Bloomberg. It would also be one of the biggest deals this year, ahead of Softbank's deal for ARM and Abbott Laboratories' deal for St Jude Medical.
The deal could be announced at NXP's earnings, set for October 26, or at Qualcomm's earnings on November 2, according to Bloomberg. Eyk Henning, Dana Mattioli, and Dana Cimilluca at The Wall Street Journal previously reported that the two companies were in talks.
Qualcomm is sitting on a huge cash pile of more than $30 billion. Much of this is trapped overseas, making an acquisition of a foreign company especially attractive. Though NXP is listed on Nasdaq, it is based in the Netherlands.
The deal would add to a wave of consolidation that's swept the semiconductor industry in the past few years.
There has been a frenzy of multibillion-dollar deals in the tech industry over the past 20 months, including Intel's takeover of Altera, Avago's acquisition of Broadcom, and Dell's $67 billion takeover of EMC.
Also, Analog Devices struck a $14.8 billion deal to buy Linear Technology, Dutch chip-making company ASML bought Taiwan's Hermes Microvision for $3.1 billion, and NXP sold its standard-products business to a group of Chinese investors for $2.75 billion.