Qualcomm raised its offer to buy NXP Semiconductors from an agreed $110 per share to $127.50, following pressure from shareholders which deemed the original bid too low.
In a statement, Qualcomm said it had reached an agreement with NXP’s board of directors for the increased offer, which gives NXP a total value of $44 billion, Reuters reported.
Under new terms of the deal, Qualcomm will now need to buy a minimum of 70 per cent of NXP’s shares to gain control, a lower threshold from 80 per cent it previously required. The deal, first struck at the end of 2016, already received antitrust clearance from eight out of the nine required government bodies around the world, with only China remaining.
But regulatory clearance does not appear to have been the major sticking point for the deal to be concluded.
Elliott Management, NXP’s single largest shareholder, repeatedly argued Qualcomm’s original offer undervalued the company. It claimed Qualcomm took advantage of NXP’s depressed share price when the deal was first struck.
At the start of the year, NXP minority shareholder Ramius Advisors ramped up the opposition by echoing Elliott Management’s comments, stating the bid “dramatically undervalues NXP”.
Qualcomm said the revised price reflected an improved performance by NXP in 2017, strong market dynamics in “key segments” such as its automotive business, and “high confidence in annualised cost synergies of at least $500 million” following analysis into the integration planning process.
The US chip company is currently also fending off its own takeover advances from Broadcom.
Indeed, its decision to up its offer for NXP could have an impact on Broadcom’s acquisition bid.
When making a “best and final offer of $82 per share” earlier this month, Broadcom stated its bid was contingent on the NXP deal going through at the price originally agreed ($110 per share), or being terminated.
Qualcomm has so far rejected Broadcom’s advances, but much hinges on the company’s annual general meeting, scheduled for 6 March.