Photographer: Simon Dawson/Bloomberg

NXP Investors Fret Being Jilted by Broadcom's Bid for Qualcomm

Investors of NXP Semiconductors NV, the target in what was on course to be the chip industry’s biggest-ever deal, are worried about being left on the sidelines of an even larger transaction.

The Dutch chipmaker’s shares fell as much as 5.2 percent Friday on concern that a bid by Broadcom Ltd. for NXP’s proposed acquirer, Qualcomm Inc., would upset a planned combination that’s already facing greater-than-expected regulatory scrutiny. Broadcom is considering a bid of more than $100 billion for Qualcomm, according to people familiar with the matter, Bloomberg reported Friday.

NXP management and shareholders are at the center of a whirlwind of deals that have shaken up the $300-billion chip industry over the last three years. The merger with Qualcomm was aimed at adding scale to match rivals created by the deals and tapping growth opportunities in areas such as the automotive market.

Right now, San Diego-based Qualcomm is under contract to go ahead with its $47 billion takeover of NXP. It had aimed to complete that process by the end of this year, but said Wednesday that regulatory scrutiny has held things up and the close might be delayed into next year, echoing earlier comments by NXP’s management. Qualcomm wants to bring in NXP to diversify its sources of revenue amid threats to its lucrative patent licensing business from an ongoing fight with Apple Inc.

Some NXP shareholders were gearing up to possibly profit more from Qualcomm’s offer. Elliott Management Corp., which owns 6 percent of NXP, has hired UBS Group AG bankers to solicit alternative bids for the chipmaker as part of an effort to force Qualcomm to raise its offer, a person familiar with the process said Thursday.

Qualcomm said Wednesday that it has received sign-off on the purchase in five of the nine required jurisdictions, with China and the European Union being the biggest holdouts. The EU process is at a standstill while the two sides negotiate over concessions the U.S. company needs to make to get approval.

How and whether NXP figures into Broadcom’s continuing ambitions remains to be seen. Chief Executive Officer Hock Tan has made a series of acquisitions to build his company, now with a market value of about $112 billion, into one of the world’s largest chipmakers. A takeover of Qualcomm, with or without NXP, would propel him to at least No. 3 in global sales behind only Intel Corp. and Samsung Electronics Co.

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