Back to top

Analyst Blog

Leading wireless chipset manufacturer Qualcomm Inc. (QCOM - Free Report) is gearing up for another acquisition, reportedly in talks to buy the Netherlands-based semi-conductor company, NXP Semiconductors NV (NXPI - Free Report) . According to a recent Wall Street Journal report, the transaction is expected to be valued at around $30 billion or more and should be completed within the next two to three months. However, nothing concrete has been disclosed by either of the companies yet.

The Deal

NXP Semiconductor was offered $110 per share, given the company's market leadership across a diverse range of end markets, continued share gain, synergies from the Freescale merger and industry-high free cash flow. Reports state that NXP Semiconductor’s acceptance of a bid of under $115 per share is quite a surprise. Meanwhile, Qualcomm intends to lower the bid further to $95 a share. Several analysts believe that although Qualcomm is a much larger entity, in reality it is in pressing need of the deal at present.

Other potential bidders for NXP Semiconductor were Broadcom Limited (AVGO - Free Report) , Intel Corporation (INTC - Free Report) and Samsung Electronics Co. Ltd.

Buyout Prospects

This transaction will place Qualcomm in the second position after Intel Corporation in terms of sales. The deal will also help Qualcomm fortify its hold in the Internet of Things (IoT) industry. It should also help Qualcomm transform its business model and shift from the low-margin, low-growth smartphone market to high-margin, high-growth, automotive market with secure devices, connectivity and payment procedures.

NXP Semiconductor is assumed to be an add-on to Qualcomm’s business as it helps the company foray beyond its mobile phone chips and smartphone market to the automotive, industrial and IoT space Moreover, this buyout will lend Qualcomm an edge over its peers in the automotive market.

Both Qualcomm and NXP Semiconductors currently have a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Confidential from Zacks

Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>


In-Depth Zacks Research for the Tickers Above

Normally $25 each - click below to receive one report FREE:

QUALCOMM INC (QCOM) - free report >>

BROADCOM LTD (AVGO) - free report >>

INTEL CORP (INTC) - free report >>

NXP SEMICONDUCT (NXPI) - free report >>