Qualcomm to buy NXP Semi for $38B in massive play on self-driving cars
Qualcomm plans to insert itself in the driver’s seat for a slice of the self-driving car market,This Qualcomm said Thursday it has agreed to acquire NXP Semiconductors for about $38 billion.
Qualcomm said it would be pay $110 per share for the Dutch company, which commands 14% of global automotive semiconductor sales. It expects the deal to close by the end of 2017.
“With innovation and invention at our core, Qualcomm also has played a critical role in driving the evolution of the mobile industry,” Qualcomm CEO Steve Mollenkopf said in a statement. “This NXP acquisition accelerates our strategy to extend our leading mobile technology into robust new opportunities, where we will be well positioned to lead by delivering integrated semiconductor solutions at scale.”
Qualcomm shares (QCOM) jumped 4% to $70.98. NXP shares (NXPI) is up 1% in trading to $100.
This deal gives the telecommunications giant a greater foothold in the burgeoning market for technology that will power self-driving cars, represents a growth space compared to the saturated market for smart phones and other mobile devices. NXP also has a desirable position in the market for technology powering the so-called Internet of Things and security products.
But it plunges Qualcomm into a crowded dog fight, with Infineon Technologies AG, Renesas Electronics, STMicroelectronics NV and Texas Instruments.
This mega-acquisition is the latest in a series of blockbuster deals for the semiconductor business, accelerating the trend of consolidation.
In July, Softbank said it would buy chip designer ARM Holdings for $32 billion. Last year, Avago agreed to acquire Broadcom for $37 billion, Intel acquired chip maker Altera for $16.7 billion, and NXP agreed to take over Freescale Semiconductor for $11.8 billion.
Qualcomm said it expects to shed $500 million in costs annually within two years of the deal’s closure, though it did not specify where the cuts would occur. The combined company would boast more than $30 billion in annual revenue.
When including the assumption of debt, the deal has enterprise value of about $47 billion.
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