Chip arb

31 January 2018 By Richard Beales Follow @richardbeales1

The larger chipmaker’s stock is close to Broadcom’s $105 bln hostile offer price. It might be because investors are warming to Qualcomm’s stand-alone worth. But that vision fades unless Qualcomm closes its own $38 bln deal for NXP. The danger now is raising its bid too much.

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Qualcomm is due to report earnings for the quarter ended Dec. 24 after the market closes on Jan. 31.

Broadcom in November made an unsolicited offer to buy the U.S. wireless-chip and technology-licensing firm for around $105 billion, an approach Qualcomm has rebuffed. Broadcom in December nominated a slate of directors for consideration by Qualcomm investors at its annual meeting on March 6.

Qualcomm agreed in October 2016 to make a tender offer to buy NXP Semiconductors for $38 billion. It said on Jan. 18 that, with approvals from South Korea and the European Union, the acquisition had been approved by eight of nine jurisdictions, the remaining one being China. Some NXP investors, including activist Elliott Management, have said the price Qualcomm is offering is inadequate.

Qualcomm on Jan. 16 sent a letter and presentation to shareholders reiterating its view that the Broadcom offer “dramatically undervalued” Qualcomm and outlining its stand-alone strategy.

(An earlier version of this item erroneously used the phrase “fourth-quarter earnings” in the first paragraph.)

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