Qualcomm, NXP Semiconductors Strike $38B Semiconductor Deal

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Qualcomm (NASDAQ: QCOM) has agreed to acquire NXP Semiconductors (NASDAQ: NXPI) for $110 per share in cash and debt, a premium of 11.5% to NXP’s closing price Wednesday. The deal represents an enterprise value of $47 billion and an equity value of about $38 billion for NXP, a Dutch manufacturer of semiconductors with a market cap of roughly $34 billion. The newly combined business expects to have annual revenues of around $30 billion, meaning it will join Intel and Samsung as one of the three largest semiconductor companies in the world.

Qualcomm – NXP Semiconductors Deal

Qualcomm closed Thursday’s trading up 2.77%, at $70.09 per share, while NXP stock climbed 0.43% after the announcement of the deal to finish at $99.08.

For Qualcomm, the acquisition signals a pivot away from the flagging smartphone sector toward a heavier focus on the IoT. The deal could lead to additional synergies in the mobile, networking and automotive industries—particularly the latter, as NXP is a leading provider of chips for automakers.

The agreement marks the third major combination in the semiconductor industry this year. In July, SoftBank (TKO: 9984) announced its plans to buy British chipmaker ARM for £24 billion, while Avago Technologies (NASDAQ: AVGO) completed its purchase of Broadcom for $37 billion in February. In the wider tech space, only the recently completed Dell-EMC mega-merger exceeds the Qualcomm-NXP deal for total value during 2016.

Such big-box deals have made IT the strongest M&A sector QoQ for a while now, with corporate pickups helping drive deal value to $138 billion in 3Q, according to PitchBook’s 3Q M&A Report. With median IT deal size jumping to $47 million and average deal size exceeding $1 billion, 3Q roughly doubled the results from last quarter.

Average & median IT deal size ($M)

Qualcomm, NXP

Chart featured in our 3Q M&A Report (click to access)

Article by Adam Putz, PitchBook

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