Qualcomm to acquire NXP for $110 per share in cash

San Diego, CA, and Eindhoven, The Netherlands (PRNewswire). Qualcomm Inc. and NXP Semiconductors N.V. today announced a definitive agreement, unanimously approved by the boards of directors of both companies, under which Qualcomm will acquire NXP. Pursuant to the agreement, a subsidiary of Qualcomm will commence a tender offer to acquire all of the issued and outstanding common shares of NXP for $110.00 per share in cash, representing a total enterprise value of approximately $47 billion.

NXP is a maker of high-performance, mixed-signal semiconductor electronics, with products and solutions in automotive ICs, broad-based microcontrollers, and secure-identification, network-processing, and RF-power devices. As a leading semiconductor solutions supplier to the automotive industry, NXP also has leading positions in automotive infotainment, networking, and safety systems, with solutions designed into 14 of the top 15 infotainment customers in 2016. NXP has a broad customer base, serving more than 25,000 customers through its direct sales channel and global network of distribution channel partners.

“With innovation and invention at our core, Qualcomm has played a critical role in driving the evolution of the mobile industry. The NXP acquisition accelerates our strategy to extend our leading mobile technology into robust new opportunities, where we will be well positioned to lead by delivering integrated semiconductor solutions at scale,” said Steve Mollenkopf, CEO of Qualcomm Inc. “By joining Qualcomm’s leading SoC capabilities and technology roadmap with NXP’s leading industry sales channels and positions in automotive, security, and IoT, we will be even better positioned to empower customers and consumers to realize all the benefits of the intelligently connected world.”

The combined company is expected to have annual revenues of more than $30 billion, serviceable addressable markets of $138 billion in 2020, and leadership positions across mobile, automotive, IoT, security, RF and networking. The transaction has substantial strategic and financial benefits:

  • complementary technology leadership in strategically important areas, combining leadership in general-purpose and automotive-grade processing, security, automotive safety sensors, and RF, enabling complete system solutions;
  • mobile capability addressing mobile SoCs, 3G/4G modems, and security;
  • automotive, offering automotive semiconductors, including ADAS, infotainment, safety systems, body and networking, powertrain and chassis, secure access, telematics, and connectivity;
  • IoT and security, offering broad-based microcontrollers, secure identification, mobile transactions, payment cards and transit, and strength in application processors and connectivity systems;
  • networking, offering network processors for wired and wireless communications and RF sub-segments, Wave-2 11ac/11ad, RF power, and BTS systems; and
  • enhanced go-to-market capabilities to serve customers, combining Qualcomm’s and NXP’s customer and ecosystem relationships and distribution channels to enable the ability to deliver products and platforms at scale in mobile, automotive, IoT, industrial, security, and networking applications.

Qualcomm expects the transaction to be significantly accretive to non-GAAP EPS immediately upon close. Qualcomm expects to generate $500 million of annualized run-rate cost synergies within two years after the transaction closes. The transaction utilizes Qualcomm’s strong balance sheet and will be efficiently financed with offshore cash and new debt. The transaction structure allows tax-efficient use of offshore cash flow and enables Qualcomm to reduce leverage rapidly.

Mollenkopf continued, “We have taken significant action to build a foundation for profitable growth, and the acquisition of NXP is strongly aligned with our strategy. Our companies both have substantial expertise in delivering industry-leading solutions to our global customers, built upon a shared commitment to technology innovation, focused R&D investments, and strong financial and operational discipline.”

“The combination of Qualcomm and NXP will bring together all technologies required to realize our vision of secure connections for the smarter world, combining advanced computing and ubiquitous connectivity with security and high performance mixed-signal solutions including microcontrollers. Jointly we will be able to provide more complete solutions which will allow us to further enhance our leadership positions, and expand the already strong partnerships with our broad customer base, especially in automotive, consumer, and industrial IoT and device level security,” said Rick Clemmer, NXP chief executive officer. “United in a common strategy, the complementary nature of our technologies and the scale of our portfolios will give us the ability to drive an accelerated level of innovation and value for the whole ecosystem. Such a strong fit will bring opportunities for our employees and customers, as well as provide immediate attractive value for our shareholders, in creating the semiconductor industry powerhouse.”

Sir Peter Bonfield, chairman of NXP’s board of directors, said, “This is a major step in my ten years’ chairmanship of NXP, and I am very pleased to see that the board of NXP has unanimously approved the proposed transaction and fully supports and recommends the offer for acceptance to NXP shareholders.”

The transaction is expected to close by the end of calendar 2017 and is subject to receipt of regulatory approvals in various jurisdictions and other closing conditions.

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