Qualcomm Sets New Deadline for NXP Deal as China Review Drags On
The two sides have extended their deal agreement until July 25, 11:59 New York time, Qualcomm said in a statement early Thursday. If they haven’t obtained Chinese sign off by then, Qualcomm will pay NXP the previously agreed termination fee of $2 billion, ending the more than $40 billion deal.
The U.S. chipmaker, which needs to complete its largest-ever deal to deliver on promises made to shareholders during its fight to fend off a hostile takeover by Broadcom Inc., didn’t explain why it was forced to withdraw and reapply for approval. The company has said it may use cash reserves set aside for the acquisition for a share repurchase if the transaction founders.
Earlier Thursday, China’s Ministry of Commerce said it’s concerned the combination of the two companies would have a negative impact on the industry. Qualcomm’s offered remedies hadn’t proven sufficient and Mofcom has asked for further concessions, a spokesman said.
The deal could turn into a bargaining chip in the increasingly tense trade negotiations between the U.S. and China. This week, the U.S. imposed a seven-year ban on ZTE Corp. that prevents the Chinese communications-equipment maker from buying American technology, a serious blow to its global aspirations. Among the products that ZTE buys from the U.S. are Qualcomm chips, which are critical in its ability to remain one of the world’s top ten smartphone makers.
The same day Mofcom said Qualcomm had to make more concessions before it could win China’s approval for the NXP deal the spokesman was asked about ZTE. He responded by saying China is “ready to take necessary steps” to protect its domestic companies.
https://www.bloomberg.com/news/articles/2018-04-19/qualcomm-sets-new-deadline-for-nxp-deal-as-china-review-drags-on
