Qualcomm Repurchasing Debt For NXP Deal Amid Uncertainty

Qualcomm on Monday offered to repurchase $4 billion worth of debt issued for the purpose of financing its proposed acquisition of Dutch NXP Semiconductors, as stipulated by the agreement between the two which requires such a move should the tie-up not be completed by June 1. The San Diego, California-based tech giant said it's still hoping to conclude the transaction but isn't certain whether it will be able to do so by the turn of the month as it's still waiting for approval from China's antitrust watchdog, the last regulator that has yet to greenlight the merger.

Beijing restarted its review of the proposed consolidation last week, with the move growing optimism among investors and seeing shares of both Qualcomm and NXP grow. The Far Eastern country is now reportedly accelerating its probe of the deal so as to show some goodwill in its upcoming trade negotiations with Washington, with the U.S. President Trump seeking to do the same by helping ZTE survive its Commerce Department-issued sanctions. Qualcomm's NXP offer valued at $44 billion expires this Friday, May 25, and is likely to be extended once again, presumably by another week. The deal would help the chipmaker diversify beyond smartphones and wireless technologies, providing it with a larger foothold in the NFC and Internet of Things segments, thus improving its sustainability strategy to a significant degree.

Qualcomm has been trying to complete the NXP acquisition since 2016, with its inability to do so in a timely manner possibly being related to Broadcom's hostile takeover attempt, some industry watchers speculated earlier this year. The company's focus is now divided across numerous electronics categories and 5G, with self-driving cars being another field it's exploring. Regardless of the outcome of the proposed NXP tie-up, Qualcomm is expected to pursue share buybacks in the near and medium term as part of its strategy to continue creating additional shareholder value, as per the chipmaker's previous statements on the matter.

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