The main motivation for the acquisition, according to Qualcomm is the creation of a new semiconductor engine for the connected world, enhancing global leadership in integrated semiconductor solutions in key applications such as automotive, Internet of Things, security and networking. The combination of both companies is also said to grow serviceable addressable markets by ~40% to $138 billion in 2020, with significantly accretive to non-GAAP earnings immediately upon close. Qualcomm launched a tender offer to acquire all of the issued and outstanding common shares of NXP for $110.00 per share in cash, representing a total enterprise value of approximately $47 billion USD.
Based in Eindhoven, The Netherlands, NXP Semiconductors N.V. is a leader in high-performance, mixed-signal semiconductor electronics, with innovative products and solutions and leadership positions in automotive, broad-based microcontrollers, secure identification, network processing and RF power. As a leading semiconductor solutions supplier to the automotive industry, NXP has leading positions in automotive infotainment, networking and safety systems, with solutions designed into 14 of the top 15 infotainment customers in 2016. NXP also has a broad customer base, serving more than 25,000 customers through its direct sales channel and global network of distribution channel partners.
“With innovation and invention at our core, Qualcomm has played a critical role in driving the evolution of the mobile industry. The 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,” said Steve Mollenkopf, CEO of Qualcomm Incorporated. “By joining Qualcomm’s leading SoC capabilities and technology roadmap with NXP’s leading industry sales channels and positions in automotive, security and IoT, we will be even better positioned to empower customers and consumers to realize all the benefits of the intelligently connected world.”
The combined company is expected to have annual revenues of more than $30 billion, serviceable addressable markets of $138 billion in 2020 and leadership positions across mobile, automotive, IoT, security, RF and networking. The transaction has substantial strategic benefits, combining leading portfolios in general purpose and automotive grade processing, security, automotive safety sensors and RF; enabling more complete system solutions.
Qualcomm is already a leader in mobile SoCs, 3G/4G modems and security applications for mobile devices and the NXP acquisition adds significant automotive semiconductor and infotainment technologies, safety and connectivity, secure identification and mobile transactions, network processors for wired and wireless communications and RF sub-segments. NXP supplies key energy efficient solutions for mobile audio, and its HD Voice and voice processing solutions are now key in most smartphones, portable audio and hearables. NXP is also recognized for its Class-AB and Class-D audio amplification solutions and is a well-established player in the whole audio market, supplying the entire entertainment chain from source to speaker.
In previous years NXP has entered key emerging audio application segments, in particular for the mobile industry, either through technology partnerships or acquisitions, including Automatic Speech Recognition (ASR) and voice interface applications. With the recently confirmed acquisition of ex-Motorola Freescale Semiconductor (a process initiated in March 2015), NXP reinforced its leadership in mobile audio and RF technologies, allowing to combine NXP experience on near field communication (NFC) and near field magnetic induction (NFMI) with Freescale’s microprocessor and microcontroller solutions, creating a very strong combined patent portfolio in such applications.
The combination of Qualcomm’s and NXP’s deep customer and ecosystem relationships and distribution channels will also contribute to create strong leverage in terms of platforms and technologies for mobile, automotive, IoT, industrial, security and networking. NXP is known to be a key Apple supplier and Qualcomm certainly would like to gain Apple as a client for its aptX codec and AllPlay wireless audio solutions and smart media platforms.
“The combination of Qualcomm and NXP will bring together all technologies required to realize our vision of secure connections for the smarter world, combining advanced computing and ubiquitous connectivity with security and high performance mixed-signal solutions including microcontrollers. Jointly we will be able to provide more complete solutions which will allow us to further enhance our leadership positions, and expand the already strong partnerships with our broad customer base, especially in automotive, consumer and industrial IoT and device level security,” says Rick Clemmer, NXP Chief Executive Officer.
“United in a common strategy, the complementary nature of our technologies and the scale of our portfolios will give us the ability to drive an accelerated level of innovation and value for the whole ecosystem. Such a strong fit will bring opportunities for our employees and customers, as well as provide immediate attractive value for our shareholders, in creating the semiconductor industry powerhouse,” he added.
The transaction is expected to close by the end of calendar 2017 and is subject to receipt of regulatory approvals in various jurisdictions and other closing conditions. The tender offer is conditioned on the tender of at least 95% of the outstanding ordinary shares of NXP or, if NXP shareholders approve the asset sale contemplated in the purchase agreement, the tender of at least 80% of the outstanding ordinary shares of NXP.
www.qualcomm.com | www.nxp.com