Chinese regulator Mofcom hasn’t signed off on Qualcomm proposal
With the direct intervention of President Trump, Qualcomm withstood a hostile takeover attempt waged by rival Broadcom, but the San Diego, Calif.-based chipmaker is still very much at a transition point–Looking to diversify its vertical focus, Qualcomm is pushing reluctant NXP shareholders for an acquisition; years of R&D into standard-essential 5G technologies is on the cusp of paying off; and major buyer Apple wants the court system to weigh-in on how Qualcomm calculates the price of its intellectual property used in building iPhones.
NXP, based in The Netherlands, specializes in automotive, security and internet of things (IoT) silicon solutions. Qualcomm initially proposed the NXP acquisition in October 2016 with an initial value of $110 per share, which has since been increased to $127.50 per share for a total of $44 billion. On April 6, the Qualcomm subsidiary overseeing the transaction extended the cash tender offer to NXP shareholders until April 13. This is the sixth extension since the beginning of March.
Another major influencing factor here is regulatory approval. Chinese authority Mofcom is the lone major global regulator that hasn’t granted its consent to the deal. In the context of the trade tension between the U.S. and China, Wall Street Journal reporter Stephen Wilmot wrote that “some investors fear the process has become politicized.”
As to the dispute with Apple, company CEO Tim Cook summarized his position earlier this year on an call with investors: “The reasoning that we’re pursuing this is that Qualcomm’s trying to charge Apple a percentage of the total iPhone value. And they do some really great work around standards-essential patents, but it’s one small part of what an iPhone is. It’s not – it has nothing do with the display or the Touch ID or a gazillion other innovations that Apple has done. And so we don’t think that’s right, and so we’re taking a principled stand on it. And we strongly believe we’re in the right, and I’m sure they believe that they are. And that’s what courts are for.”
Bloomberg’s Apple and consumer tech news specialist Mark Gurman report’s Cook will be deposed in the ongoing legal dispute on June 27.
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