The biggest acquisition in the semiconductor industry has received approval from U.S. Antitrust Regulators, allowing Qualcomm to go ahead and acquire NXP Semiconductors for $47 Billion.
The waiting period required for companies under the Hart-Scott-Rodino Antitrust Improvements Act (HSR) has expired, as Reuters quotes from Qualcomm. The HSR Act stipulates that parties must not complete certain mergers and acquisitions until they have made a detailed filing with the U.S. Federal Trade Commission and the Department of Justice, and then wait for those agencies to determine that the transaction will not adversely affect U.S. commerce under current antitrust laws.
This is a rather routine procedure that gets triggered only when the value of the transaction and in certain cases, the size of the parties involved, exceeds certain thresholds. Given Qualcomm and NXP Semiconductors sizes in the semiconductor space, it’s unsurprising that this acquisition met the regulatory threshold. You can read more about these thresholds over here.
Qualcomm is also extending its cash tender offer for all outstanding shares of NXP Semiconductors.
NXP’s acquisition will help broaden Qualcomm’s scope as areas of focus under NXP were primarily related to the automotive industry. This will reduce the dependence of the parent company on smartphone chips, as Qualcomm is seeing rising competition from Chinese and other Asian manufacturers in this area, which is likely to have its toll on profit margins in the future. The acquisition of NXP is expected to have an annual revenue totaling more than $30 billion.
It is not all about money, though. Qualcomm will also see benefits in the form of additional expertise in the automotives silicon market as well as the acquisition of additional sales channels, along with the sharing of NXP’s portfolio of security solutions which in turn will complement Qualcomm’s Internet of Things solutions. The acquisition transaction is expected to be completed by the end of 2017.
Source: Reuters
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