US computer chip giant Qualcomm said it was set to drop a USD 43 billion acquisition of Dutch rival NXP after failing to win approval from antitrust authorities in China.
Qualcomm chief executive Steve Mollenkopf said the Californian firm would end its effort when the bid expired at 11:59 pm Eastern time (0359 GMT Thursday) barring any "new material developments".
The move comes amid increasing trade tensions between the United States and China, but in Beijing the commerce ministry denied those tensions affected the proposed merger and sidestepped questions about its fate.
"The issue with the case is related to anti-monopoly law enforcement and has nothing to do with China-US trade frictions," commerce ministry spokesman Gao Feng told reporters at a weekly press briefing today.
But he declined further comment, deferring to China's market regulator for additional details.
The State Administration for Market Regulation did not immediately respond to faxed questions nor provide any updates on its website.
Qualcomm had extended the deadline several times for the tie-up which would have given the dominant smartphone chipmaker firm a broader array of products including sensors and microprocessors for connected "internet of things" devices.
It also raised its bid -- from USD 110 to USD 127 a share -- in February, to the irritation of fellow chipmaker Broadcom, which itself recently had a hostile bid for Qualcomm blocked by the White House.
Washington said the acquisition of Qualcomm by Broadcom -- now Singapore-based -- would help Chinese competitors such as Huawei, particularly in the emerging 5G blazingly fast wireless internet, where a stronger China could present a national security issue.
According to Qualcomm, the acquisition of NXP had received antitrust clearance from eight of the nine required government regulatory bodies around the world, with the matter still pending in China -- suggesting the takeover may be a collateral victim of US-China trade tensions.
"We intend to terminate our purchase agreement to acquire NXP when the agreement expires at the end of the day today, pending any new material developments," Mollenkopf said in a statement yesterday with the company's quarterly earnings.
"In addition, as previously indicated, upon termination of the agreement, we intend to pursue a stock repurchase program of up to $30 billion to deliver significant value to our stockholders."
The company also said it expected to pay NXP a USD 2 billion breakup fee. Based in the Dutch town of Eindhoven, NXP is a leading maker of chips for the auto industry, as well as for contactless payment systems.
A former division of the Dutch electronics giant Philips, it became independent in 2006. Qualcomm said profit rose 41 per cent from a year ago to USD 1.2 billion while revenues edged up four per cent to USD 5.6 billion.
Disclaimer: No Business Standard Journalist was involved in creation of this content
