UPDATED 23:47 EDT / OCTOBER 20 2016

NEWS

Report: Qualcomm could close $30B deal for NXP Semiconductors next week

Qualcomm Technologies Inc. is said to be closing on a deal to acquire rival firm NXP Semiconductors N.V., according to a report in Bloomberg that cites “people familiar with the process.”

Rumors of acquisition talks between the companies first emerged last month via a report in the Wall Street Journal, which put a $30 billion price tag on the deal. Bloomberg’s sources say negotiations are now in their final stages, and describe it as an all-cash for between $110 and $120 per share. They gave two possible dates for when the acquisition might be announced – during NXP’s next earnings call on Oct. 26, or at Qualcomm’s earnings on Nov. 2.

The news was received warmly by shareholders, with NXP’s share price jumping by just over 3 percent from $100.70 to $104 per share. Qualcomm’s price also jumped by 2.5 percent, to $67.46.

Bloomberg adds that Qualcomm has a market cap of about $99 billion, while NXP’s is close to $36 billion. As such, the deal would be the largest in the history of the semiconductor industry, if it goes through. It would also be one of the biggest tech acquisitions of the year, valued higher than Softbank Group Corp.’s $31.4 billion buyout of British chip designer ARM Holdings Plc., which was completed last month.

Qualcomm can certainly afford such a deal, Bloomberg reports. The company is said to be sitting on cash reserves of over $30 billion, and most of this fortune is located overseas, which makes a foreign acquisition even more attractive.

If the deal does take place, it would be the latest in a wave of consolidation that’s swept across the semiconductor industry in recent years. Last year, among other acquisitions, NXP itself bought Freescale Semiconductor Inc. for $11.8 billion, Intel Corp. acquired Altera Corp. for $16.7 billion and Avago Technologies Ltd. swallowed Broadcom Corp. for $37 billion.

The Wall Street Journal said earlier that if the deal does happen, Qualcomm would become the biggest supplier of semiconductor chips for cars, which is one of the most promising of markets for chip makers as the trend towards smarter cars accelerates. The move would also be a welcome financial boost for Qualcomm, which has struggled in the last couple of years with the contracting smartphone market as well as the recent loss of its iPhone modem business to IBM.

Photo Credit: Janitors Flickr via Compfight cc

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