Daily Times

The deadline for Qualcomm Inc to buy NXP Semiconductors passed at midnight US eastern time without any word on Chinese regulatory approval, likely shutting the door on a deal embroiled in a bitter US-China spat.

Qualcomm had said earlier in the day that it would drop its $44 billion bid for NXP – the world’s biggest semiconductor takeover – unless it received a last minute reprieve. If the deal is terminated, Qualcomm will pay a $2 billion deal breakup fee to NXP no later than 09:00 ET on July 26.

There was no word from China’s State Administration for Market Regulation or Qualcomm after the time for the deal to expire passed. Qualcomm did not immediately respond to a request for comment.

Investors expressed relief at Qualcomm’s comments earlier in the day and the company’s shares rose nearly 7 percent in after market trading. The San Diego chipmaker delivered surprisingly strong third-quarter results and a rosy outlook for so-called 5G technology, the next generation of wireless data networks.

The company also said earlier on Wednesday that it will buy back $30 billion in shares if the deal ultimately failed, making good on a promise to reassure investors about its prospects.

Qualcomm still faces challenges, including expectations that its chips will not be in the next round of Apple’s iPhones and the need to find new markets beyond mobile phones without NXP’s help. But it cited progress on one of two major patent royalty conflicts, thought to be with Chinese phonemaker Huawei Technologies Co Ltd, in the form of a $700 million interim agreement.

The collapse of the deal may discourage other US firms hoping to buy into China’s huge developing markets and companies, although technology deals seemed the main concern.

“We obviously got caught up in something that was above us,” Qualcomm Chief Executive Steve Mollenkopf said in an interview after the announcement earlier in the day.

“We think moving on, reducing the amount of uncertainty in the business and increasing the focus is the right thing to do with the company.”

Qualcomm needed approval from China, the last of nine global regulators to be consulted, because the country accounted for nearly two-thirds of its revenue last year.

Barring a last-minute reprieve, the chipmaker said in its results release it would make good on a pledge with NXP to call off the merger if it had not won Chinese regulatory approval by 23:59 Eastern US time on Wednesday.

NXP Semiconductors shares fell almost 4 percent to $94.50.

Published in Daily Times, July 27^th 2018.