Stock Monitor: NXP Semiconductors Post Earnings Reporting
LONDON, UK / ACCESSWIRE / February 22, 2018 / Active-Investors.com has just released a free research report on Qualcomm Inc. (NASDAQ: QCOM). If you want access to this report all you need to do is sign up now by clicking the following link www.active-investors.com/registration-sg/?symbol=QCOM as the Company's latest news hit the wire. On February 20, 2018, the Company announced that its indirect wholly owned subsidiary - Qualcomm River Holdings B.V. has finalized an agreement to acquire all outstanding shares of NXP Semiconductors N.V. (NASDAQ: NXPI) at a revised rate of $127.50 per share. The all-cash offer has been approved by the Board of Directors of both companies. Register today and get access to over 1,000 Free Research Reports by joining our site below:
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Active-Investors.com is focused on giving you timely information and the inside line on companies that matter to you. This morning, Qualcomm and NXP Semiconductors N.V. most recent news is on our radar and our team decided to put out a fantastic report on the company that is now available for free below:
www.active-investors.com/registration-sg/?symbol=QCOM
www.active-investors.com/registration-sg/?symbol=NXPI
The Revised Offer
Qualcomm's indirect wholly owned subsidiary, Qualcomm River Holdings, has offered to pay NXP' shareholders $127.50 per share. The current offer is 16% higher compared to the initial offer of $110 per share in October 2016. The revised agreement also lowers the condition of minimum tender offer from 80% to 70%. Additionally, Qualcomm River Holdings has signed agreements with nine major stockholders of NXP who own over 28% stake, including shareholding of funds affiliated with activist investors Elliott Advisors (UK) Limited and Soroban Capital Partners L.P. As per this agreement all the nine NXP's stockholders have agreed to tender their shares at $127.50 per share. Qualcomm's offer expires on March 05, 2018.
The deal which has been on hold for a long time has already been cleared by eight antitrust regulators across the world and is only awaiting clearance from Ministry of Commerce (MOFCOM) in China. Qualcomm is confident of getting clearance from MOFCOM too shortly.
Qualcomm has disclosed that it plans to fund the additional cash portion of the offer via cash in hand and fresh debt. However, the revised tender offer is not subject to any financing condition.
Management Quotes
Commenting on the revised offer for NXP, Steve Mollenkopf, CEO of Qualcomm Inc., said:
“Qualcomm's leading SoC capabilities and technology roadmap, coupled with NXP's differentiated position in Automotive, Security and IoT, offers a compelling value proposition. We remain highly confident in our fiscal 2019 non-GAAP EPS target of $6.75 to $7.50, which includes $1.50 per share accretion from the acquisition of NXP.”
Dr. Paul E. Jacobs, Chairman of the Board of Qualcomm, added:
“NXP is a highly strategic and attractive acquisition for Qualcomm that enhances the value of our leading 5G technologies. We also believe the revised agreement provides certainty for both Qualcomm and NXP stockholders.”
Value Proposition
Qualcomm believes that the revised offer for NXP reflects the improved financial performance of NXP since the offer was made in 2016. NXP's non-GAAP operating income (excluding Standard Products) witnessed a 20% increase from calendar 2016 to 2017, which topped Qualcomm's expectations. NXP also witnessed significant growth in key industry segments viz. Auto business whose revenues increase by 11% on a year-on-year basis. This complements Qualcomm's own business growth in these complementary industry segments which would greatly add to the value for customers and shareholders of the merged company. Qualcomm's Auto division has a $3 billion revenue pipeline while its Internet of Things (IoT) unit recorded sales of $1 billion in FY17. Qualcomm expects to realize cost synergies of at least $500 million annually because of this deal. Qualcomm also projects that the deal will be accretive to its non-GAAP EPS by $1.50 in FY19.
The Qualcomm-NXP deal is expected to create a leader in 5 key industry segments – RFFE (RF front-end), Auto, IoT, Security and Networking. The deal allows Qualcomm to expand its overall market share and help reach its target of $150 billion SAM (Serviceable Addressable Market) by FY20.
Strategic Move
By raising the offer price for NXP, Qualcomm has made a very strategic move. On one hand, it has managed to bring activist investors in NXP like Elliott Advisors to support the deal. Elliott Advisors have been pushing for a higher offer for NXP and a major reason the Qualcomm-NXP deal was stalled for such a long time. The deal with NXP's major shareholders ensures that the Qualcomm-NXP deal will finally close and add to Qualcomm's growth story.
On the other hand, Qualcomm's current move totally blindsides Broadcom, which has made hostile takeover attempts to acquire Qualcomm. Broadcom first approached Qualcomm in November 2017 with an unsolicited offer of $103 billion at $70 for each Qualcomm's share followed by a revised unsolicited offer in February 2018 of $121 billion at $82 for each Qualcomm's share. Broadcom's offer was based on the premise that Qualcomm would offer $110 for each NXP's share. Qualcomm's Board rejected both bids of Broadcom stating that the offers undervalued Qualcomm and said that Broadcom had not included the value created by NXP's acquisition. Qualcomm was also not confident about Broadcom's ability to get requisite regulatory approvals to complete the deal in time. Qualcomm's revised offer for NXP puts Broadcom under pressure to either raise its offer or backout. In both scenarios, Qualcomm will end up with a winning hand.
Stock Performance Snapshot
February 21, 2018 - At Wednesday's closing bell, Qualcomm's stock marginally fell 0.92%, ending the trading session at $63.40.
Volume traded for the day: 14.13 million shares, which was above the 3-month average volume of 11.13 million shares.
Stock performance in the previous six-month period – up 21.97%; and past twelve-month period – up 11.72%
After yesterday's close, Qualcomm's market cap was at $94.48 billion.
The stock has a dividend yield of 3.60%.
The stock is part of the Technology sector, categorized under the Communication Equipment industry.
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