Qualcomm has been handed yet another unwanted headache. Already occupied with its legal battle against Apple while staving off unsolicited takeover talks from Broadcom, Qualcomm’s own deal to acquire NXP looks like it may have hit a road block.
Activist investor in NXP Elliott Management has said that the semiconductor firm is actually worth about 23 per cent more than Qualcomm $38-billion offer to buy the chipmaker. Elliott, which has a 6 per cent stake in NXP, said that the firm was worth $135 per share on an intrinsic standalone basis, compared with Qualcomm’s offer of $110 made way back in October 2016. Elliott, a New York-based hedge fund, went so far as to say that Qualcomm’s offer had taken advantage of NXP’s depressed stock price last year and has acted as a ceiling on its valuation. “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,” Elliott said in a letter to other NXP shareholders.
Qualcomm moved quickly to rubbish Elliott’s claims, saying that its believed the agreed price was full and fair and that it expected to close the acquisition soon. “Elliott’s value assertion for NXP is unsupportable and is clearly nothing more than an attempt to advance its own self-serving agenda,” Qualcomm said in a statement.
Acquiring NXP would make Qualcomm the leading chip supplier to the fast-growing automotive market. However, since making the offer in October 2016, Qualcomm has become embroiled in a tit-for-tat patent war with Apple, as well as having to fend off takeover attempts from Broadcom.
Broadcom had indicated it was willing to acquire Qualcomm, for $70 per share, irrespective of whether it closed the NXP deal. However Qualcomm rejected the $103-billion offer last month and reinforced that it is attempting to expand.