EU & Korea Approve Qualcomm's $38 Billion NXP Acquisition

Qualcomm Logo 2018 AM AH 1

The European Commission and Korea Fair Trade Commission approved Qualcomm’s proposed purchase of NXP Semiconductors, a Dutch chip manufacturer which the company has been trying to acquire since late 2016. The development places the $38 billion deal on the verge of completion, with China being the only remaining regulator that has yet to greenlight the transaction. The San Diego, California-based tech giant still missed its already delayed deadline for the merger which it originally planned to conclude by last Friday but has described the current state of affairs as a minor and acceptable setback. Qualcomm Chief Executive Officer Steve Mollenkopf remains “optimistic” about the chance that Beijing clears the deal in the near future but the firm has yet to provide a new timeframe for the completion of one of the largest consolidations in the history of the tech industry.

Due to the large international presence of both Qualcomm and NXP, the proposed merger requires the approval of nine sovereign nations. The company’s road to approval from the European Union’s antitrust watchdog was a long one, with Qualcomm ultimately yielding to a number of requests from the Commission. Most of its concessions are related to NXP’s near-field communication (NFC) patents used by a wide variety of original equipment manufacturers around the world. No standard-essential NFC patents held by NXP will be acquired by Qualcomm as part of the deal and will instead be given to another entity which will offer licenses for them without royalties for three years following the transaction. NXP’s MIFARE ticketing platform and related trademarks will be licensed on identical or better terms as they currently are for the following eight years, Qualcomm agreed. Over the same period, the company will guarantee unchanged interoperability between its baseband chips, NXP’s NFC modules, and silicon designed and manufactured by other firms.

The remaining NXP-owned patents set to be acquired by Qualcomm as part of the merger won’t be enforced in a proactive manner and will be licensed without royalties. Should China refuse to clear the company’s bid, Qualcomm is planning to conduct a major stock repurchase so as to still create significant value for shareholders in the near term, the company revealed earlier this week as part of the latest step in its effort to convince investors against voting for a new board in March and effectively selling the tech giant to Broadcom that’s presently trying to conclude a hostile takeover of Qualcomm worth $105 billion. If completed, the merger would be the largest consolidation in the history of the industry, dwarfing Dell’s $67 billion purchase of EMC from 2015.