Qualcomm Technologies Inc. this morning announced a hefty $44 billion acquisition offer for NXP Semiconductors N.V., a fellow chip maker based in the Netherlands that it has been trying to buy for more than a year.

The price tag amounts to a 16 percent increase over the company’s original bid of $38 billion, excluding debt. It’s a major win for the group of NXP investors that have been calling on Qualcomm to up the offer over the past few months. The consortium was led by Soroban Capital and activist hedge fund Elliott Management Corp., the two largest shareholders in the Dutch chipmaker.

Under an agreement that Qualcomm has struck with the group, the acquisition will go through if it’s approved by shareholders whose combined stake amounts to at least 70 percent. The previous threshold was 80 percent. Both Qualcomm’s and NXP’s boards have approved the new offer.

The move is particularly significant because Qualcomm is the target of an ongoing hostile takeover effort by Broadcom Ltd. The latter company has said that its $121 billion acquisition offer is dependent on the chipmaker not upping its original $38 billion bid for NXP.

However, the revised NXP deal may not be enough to block the takeover. The Financial Times quoted a person close to Broadcom Chief Executive Officer Hock Tan as saying that “it’s frustrating but it doesn’t end things.”

A Qualcomm insider told the publication that the NXP acquisition could strengthen the chipmaker’s negotiating position against Broadcom. The firms met last week and have held consultations with two Wall Street advisory firms. One firm recommended Qualcomm shareholders approve Broadcom’s proposal to reshuffle its board with directors who would approve the takeover bid, while the other suggested that four of the six nominees be accepted.

At the competitive level, the NXP deal is set to give Qualcomm a valuable new revenue source. The Dutch company is the largest semiconductor supplier to the auto industry, where demand for chips is rising rapidly as advanced features such as autonomous driving are being added to vehicles.

Moreover, Qualcomm estimates that acquiring NXP could create an opportunity to realize annual cost savings of at least $500 million. The buyout has so far received clearance from eight of the nine antitrust bodies by which it needs to be approved. The only one remaining is in China, where Qualcomm said it’s optimistic that it will receive clearance “in the near term.”

Photo: Flickr | Eugenuity (license)