(Changes headline, adds detail on NXP)
By Greg Roumeliotis and Liana B. Baker
Sept 29 NXP Semiconductors NV is
exploring selling itself to Qualcomm Inc in a deal that
could be valued at more than $30 billion, two sources familiar
with the matter said on Thursday.
The deal would help diversify Qualcomm's business and make
it a bigger supplier to the automotive industry. Talks are in
the early stages and NXP may entertain other offers, should they
emerge, according to one of the sources.
An agreement with Qualcomm could be struck in the next two
to three months, according to the Wall Street Journal, which
first reported news of the talks. (on.wsj.com/2cZ0TUQ)
Representatives for Netherlands-based NXP and San
Diego-based Qualcomm declined to comment.
NXP shares rose 16.9 percent to close at $96.12 on Thursday,
while Qualcomm's rose 6.3 percent to $67.45.
NXP closed a nearly $12 billion deal to buy U.S.-based
Freescale Semiconductor last December, creating the world's top
maker of automotive electronics and doubling the percentage of
its auto-related revenue to 40 percent. It could also attract
interest from other large semiconductor companies such as
Broadcom and Texas Instruments Inc, analysts have said.
Qualcomm, which supplies Android smartphone makers and Apple
Inc, has been dealing with slowing smartphone sales and
stiff competition from Chinese and Taiwanese rivals.
Qualcomm has so far sat out the transformative consolidation
sweeping the industry, which has seen mega-deals such as Avago
buying Broadcom for $37 billion last year.
Qualcomm gets the bulk of its revenue from chip sales but
most of its profit comes from wireless patents it licenses to
the mobile industry. It explored a plan to break up its chip
business from its patent licensing unit after pressure from
activist investor Jana Partners but decided to remain whole.
Mizuho Securities analyst Vijay Rakesh said that the deal
would give Qualcomm a roadmap for the next decade while moving
away from a maturing handset market and toward the faster
growing opportunity in automotives.
Qualcomm was ranked third in terms of revenue among global
semiconductor companies in 2015, while NXP ranked No. 7,
according to research firm IHS.
RBC analyst Amit Daryanani said the potential deal would be
accretive to Qualcomm, which could also use offshore cash.
"Assuming a reasonable valuation is paid, this would be an
attractive acquisition for Qualcomm and a good use of $30
billion in cash Qualcomm currently has on their balance sheet,"
NXP has a market value of about $28.5 billion, while
Qualcomm's is about $93 billion.
(Reporting by Greg Roumeliotis in New York and Liana B. Baker
in San Francisco, Rishika Sadam in Bengaluru and Eric Auchard in
Frankfurt; Editing by Ted Kerr, Sriraj Kalluvila and Bernard