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October 28, 2016

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Qualcomm to buy NXP for US$38b

QUALCOMM Inc agreed to buy NXP Semiconductors NV for about US$38 billion in the biggest-ever semiconductor industry deal, expanding the reach of its chips from phones to cars.

The deal will make Qualcomm, which provides chips to Android smartphone makers and Apple Inc, the top supplier of chips to the automotive industry and help to reduce its dependence on the smartphone market.

San Diego-based Qualcomm, which gets most of its profit from wireless patents it licenses to the mobile industry, has been facing slowing smartphone sales and stiff competition from Chinese rivals.

Qualcomm had sat out the transformative consolidation sweeping the industry, but yesterday’s deal tops Avago’s US$37 billion acquisition of Broadcom last year.

The equity value of Qualcomm’s offer is US$37.88 billion, according to Reuters calculations based on the company’s 344.4 million diluted shares as of October 2. Including debt, it is worth roughly US$47 billion, according to the companies.

The combined entity is set to have annual revenue of above US$30 billion.

Eindhoven-based NXP became the world’s biggest maker of automotive electronics after it acquired US-based Freescale Semiconductor for about US$12 billion last December.

Qualcomm said it would offer US$110 per share in cash, a premium of 11.5 percent to NXP Semiconductor’s Wednesday’s close.

The company said it intends to fund the transaction with cash on hand and new debt.

The transaction is set to close by the end of 2017.


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