Qualcomm reaffirmed its commitment to closing an acquisition of NXP Semiconductors at an agreed value of $38 billion, despite the latter’s largest single shareholder insisting the price should be 23 per cent higher.
The deal, currently going through several rounds of regulatory scrutiny, was first agreed in October 2016, valuing each NXP share at around $110. The acquisition is expected to complete in early 2018.
However Elliott Management, which owns a 6 per cent stake in NXP, reiterated its opposition to the value of the deal in a letter to shareholders, after first voicing its concerns earlier this year.
Elliott Management told shareholders Qualcomm’s offer had taken advantage of a depression in NXP share price in 2016, which contributed to the lower valuation.
It wants the value per-share increased to $135 on a standalone basis.
“We believe NXP’s prospects are bright. Approximately half of NXP’s revenue is exposed to exciting growth engines of the semiconductor market – automotive and industrial,” said the New York-based hedge fund.
Elliot is NXP’s largest shareholder, with its 6 per cent valued at approximately $2.3 billion, based on Qualcomm’s valuation. For the Qualcomm deal to go through, at least 70 per cent to 80 per cent of NXP shareholders must agree to tender their shares.
In light of Elliot’s letter, Qualcomm hit back stating Elliot’s value assertion of NXP is “clearly nothing more than an attempt to advance its own self-serving agenda”.
Qualcomm added the price agreed is “full and fair”.
EU approval for Qualcomm’s NXP deal is expected by the end of the year, while Japan’s Fair Trade Commission is also reportedly set to give the green light.
Indeed, clearance from Japan and EU antitrust authorities would take Qualcomm closer to finalising the deal, and also give it more muscle to fight an unsolicited $130 billion takeover bid from Broadcom.