Bloomberg News published an article today, Qualcomm $47 billion acquisition of NXP company (NXP Semiconductors) is made for the global intelligent mobile phone demand slowdown measures. The transaction will promote the high pass in the Internet of things and automotive applications chip market to occupy the leading position.
Qualcomm today announced that will be $110 per share in cash to acquire NXP (NXP Semiconductors), the total size of the transaction is approximately $47 billion. Qualcomm's move aims to accelerate the expansion of new business areas, so as to reduce the dependence on the smart phone business.
This transaction is by far the world's largest semiconductor market mergers and acquisitions. Qualcomm said it would use the hands of cash and loans to finance the transaction. Qualcomm CEO Steve · Moran Krakow (Steve Mollenkopf) said that the deal will promote the high quickly into the emerging automotive chip market. Through the acquisition of Freescale Semiconductor Carle (Freescale Semiconductor), NXP semiconductors occupy the leading position in the market.
Mo Lenkov in an interview, said: “ we have been exploring new business, it is not a secret. If you focus on our development strategy we will know that we are expanding the market, especially those that are being moved by mobile technology. ”
Qualcomm's move is also a response to the slowdown in the global demand for smart phones. With NXP after the merger, the two companies with annual revenues of more than $30 billion. After the completion of the transaction 2 years, the annual cost savings of only $500 million for qualcomm.
According to the calculation of 344 million 400 thousand shares, equivalent to $110 per share offer Qualcomm approximately $38 billion in cash to acquire nxp. Plus the debt, the overall size of the transaction is about $47 billion.
Mo Lenkov said, hoping to merge the two companies and their products as soon as possible, the merger of the new company executives will also come from the two companies, respectively.
In early trading today, the stock price rose 2.8% NXP to $101.45, while Qualcomm rose 2% to $69.60.
Semiconductor market, the largest M & A transactions
Last year, the global semiconductor market experienced a large-scale integration and mergers and acquisitions, in order to cope with rising costs and customers. For example, Avago Technologies acquired Broadcom to $37 billion to about $16 billion 700 million acquisition of Intel Altera. But at that time, Qualcomm is still on the sidelines. Today, Moran Krakow finally shot, using Qualcomm's $about 30000000000 in cash to the semiconductor market by far the largest mergers and acquisitions.
Capital management company Becker Capital Management fund manager Sid · Palekar (Sid Parakh) said: “ mobile chip market has not much room for growth, while Qualcomm has is the dominant supplier in the market. As a long-term investor, I would like to see a more diversified business, have the potential to participate in new market competition, so as to usher in a more rapid growth. ”
According to analysts expect sales of NXP will reach $9 billion 480 million this year. Based on revenue, NXP scale of less than half of Qualcomm's revenue this year, which is expected to reach $23 billion 200 million. However, in the past three years, NXP average revenue growth of about 11%, while Qualcomm's revenue last year fell by 5%, far less than the 30% growth in 2013.
As with other chip manufacturers, Qualcomm “ &rdquo network; the market is also look at fiercely as a tiger does. By modifying the current mobile phone chips, Qualcomm's products have been able to adapt to a range of more extensive equipment. Although it is still in the early stages of development, but Qualcomm has won a number of customers, mainly from the automotive market. For example, the car entertainment equipment, as well as the connection of the car and cell phone chips.
Investment institutions & Co; Cowen analyst Timothy · Arcuri (arcuri Timothy) said: “ in the vertical field of things, such as the automotive market, the semiconductor company will be used for great development space. Through the acquisition of NXP semiconductors, Qualcomm will occupy a more favorable position in the market. In the connection equipment and automotive applications market, Qualcomm will become the dominant manufacturer. ”
For Qualcomm, the acquisition of NXP semiconductors are also facing some risks. Last March, NXP has just announced the fly think of Carle's $11 billion 800 million acquisition of semiconductor. Although the transaction has been completed, but the integration is still in the process of.
In addition, NXP semiconductors used in semiconductor manufacturing plant, which is high under taboo. All along, Qualcomm will outsource the chip manufacturing task to the third party. Analysts said that, with the design of the chip is different, the operation of the plant requires different management skills.
In addition, many factories manufacturing technology NXP semiconductors have become obsolete, cannot easily adapt to Qualcomm's chip design. NXP has approximately 44000 employees, while the high pass only 33000.