Published: Wed, December 05, 2018
Markets | By Erika Turner

Qualcomm stops bid for rival NXP

Qualcomm stops bid for rival NXP

Qualcomm said on Monday it was not looking to revive the acquisition. According to Bloomberg, China's Ministry of Commerce was concerned about Qualcomm's plans for patent licensing - but it is commonly supposed that the USA's threatened trade war with the country, in part down to a sales ban on ZTE products in the U.S., was a major factor.

According to Qualcomm, the deadline for any transaction has expired thus terminating any deal.

"Although we were pleased to hear from President Trump and President Xi about the previously proposed acquisition of NXP by Qualcomm, the deadline for that transaction has expired", said the company.

"Qualcomm considers the matter closed", a Qualcomm spokesman said.

Qualcomm itself was a takeover target for Broadcom earlier in the year, but Trump blocked the proposed $140 billion attempt on national security grounds.

In addition, Qualcomm has already moved ahead with a $30 billion stock buyback in the wake of the original acquisition failure, with $21 billion already spent, "making it significantly more hard to re-engage on a deal", said Rasgon.

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Chinese regulators have not made any immediate comment.

According to reports, Qualcomm and NXP have been patiently waiting for two years to win the regulatory approval from China. Qualcomm has a large presence in China so they were not left with any real options except to cancel the deal. Since Qualcomm has significant ties with Chinese OEMs, the chip maker had no choice but to agree with China's decision.

Post rejection of their offer, Qualcomm has already paid a hefty $2 Billion to NXP for terminating the offer and announced a $30 billion stock repurchase plan to help soothe investor sentiments. In July 2018, the deal finally fell apart when China disapproved the deal. Afterward, Trump said Xi would consider giving a green light to a Qualcomm/NXP merger should the deal be presented to him again.

Competition regulators in eight countries had approved the takeover.

United States lawmakers also passed reforms earlier this year that increased CFIUS' scrutiny of deals.

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