Qualcomm has announced that it will be buying NXP Semiconductor for $47 Billion and with this purchase, Qualcomm will be able to strengthen its foothold in IoT and automotive electronics. The specifics of the deal includes $110 a share in cash for NXP which is valued at $47Billion (including debts). Qualcomm has decided to raise the funds for the deal with cash in hands and additional debt. The better cash flow is expected to strengthen Qualcomm’s dividend and dividend growth. Also, Qualcomm aims at a cumulative savings of $500 million in cost savings two years from now.
Qualcomm is arguably the biggest Global player when it comes to SoC’s, 3G and 4G modems and it is also involved in security space. The NXP purchase will not only help Qualcomm to broaden their offerings but also ramp up its capacity and eventually achieve larger volumes. Also, with the NXP Qualcomm can finally move beyond the mobile ecosystem. Post the deal Qualcomm’s mobile revenue will be decreased to forty-eight percent alongside the Auto and IoT revenue of 29 percent. This is what Peter Bonfield had to say about the deal, “This is a major step in my ten years’ Chairmanship of NXP, and I am very pleased to see that the board of NXP has unanimously approved the proposed transaction and fully supports and recommends the offer for acceptance to NXP shareholders”
NXP semiconductors have been leaders in network processors for wired and wireless communication segments, board-based microcontrollers, secure identifications, mobile transactions and payment cards. Furthermore, Qualcomm can now leverage NXP’s reach and technology when it comes to the automotive semiconductor, powertrain, and Chassis, telematics, and connectivity.