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Corporate News Blog - Qualcomm/NXP Deal Under European Commission's Intense Scrutiny

LONDON, UK / ACCESSWIRE / June 13, 2017 / Pro-Trader Daily takes a look at the latest corporate events and news making the headlines for QUALCOMM Inc. (NASDAQ: QCOM). In a press communication dated June 09, 2017, the European Commission (EC) announced that it has opened an in-depth investigation into Qualcomm's proposed acquisition of NXP Semiconductors N.V. (NASDAQ: NXPI) ("NXP") under the EU Merger Regulation. For immediate access to our complimentary reports, including today's coverage, register for free now at:

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At Pro-TD, we make it our mission to bring you news that matter about the stock you follow. Today, our research desk covers a blog story on QCOM and NXPI. Go directly to your stock of interest and access today's free coverage at:

http://protraderdaily.com/optin/?symbol=QCOM

http://protraderdaily.com/optin/?symbol=NXPI

EC's investigation

Qualcomm develops and manufactures baseband chipsets for smartphones whereas NXP is the leading processor supplier to the auto industry. NXP also manufactures near-field communication (NFC) chips and secure elements (SEs) for mobile devices. Qualcomm announced the acquisition of NXP in an all-cash deal in October 2016. The in-depth investigation was announced after EC conducted the preliminary review of the deal, which ended on June 09, 2017. EC wanted to further scrutinize the merger after Qualcomm failed to offer any concessions to ease EC's concerns with regards to the deal.

The EC feels that the Qualcomm /NXP merger would result in increase in prices, and reduced choices and innovation in the semiconductor industry.

The EC's investigation is being led by Margrethe Vestager, Commissioner in charge of EC's competition policy. Commenting on the matter, she said:

"We use our electronic devices every day - mobile phones or tablets. As semiconductors are used in practically every electronic device, we are dependent on them in those devices. With this investigation, we want to ensure that consumers will continue to benefit from secure and innovative products at competitive prices."

The EC has 90 working days to complete its in-depth investigation and has time till October 17, 2017 to announce its stance on the matter.

EC's concerns with the Qualcomm/NXP deal

EC conducted an initial market investigation with regards to chips used in smartphones as well as in the automotive industry. Its concerns are a result of this market study and the impact of the Qualcomm/NXP deal on the semiconductor industry.

The merged entity from the Qualcomm/NXP merger will have a very strong position in both the chipsets with regards to smartphones as well as automobile industry. As a result, the merged entity would squeeze out rivals and jack up prices.

The merged entity will have complete access to NXP's intellectual property licensing practices especially its chips for the automotive market. EC is concerned that the merged entity would change NXP's patent licensing practices for mobile payment technology to collect royalties or exclude rivals.

The EC is also concerned that the merger will wipe out the competition especially for chips used in the automotive sector especially as the automotive industry moves towards manufacture of more integrated and digitally connected vehicles.

The Qualcomm/NXP deal

The Qualcomm /NXP deal has a total enterprise value of approximately $47 billion. It is one of the biggest deals in the semiconductor industry. As per terms of the merger agreement, a Qualcomm's subsidiary would acquire all outstanding shares of NXP via a tender offer by paying $ 110 per share in cash to NXP's shareholders. The condition of the agreement was that Qualcomm should manage to acquire at least 95% of outstanding shares of NXP or at least 80% of shares of NXP in case it gets shareholders' approval of the tender conditions. The deal was expected to close in end of FY17. The merged Qualcomm/NXP entity is expected to have revenues of over $ 30 billion annually.

The US Federal Trade Commission has already approved the deal in April 2017.

Qualcomm's reaction to EC's in-depth investigation

Qualcomm confirmed that EC is conducting an in-depth investigation of its merger deal with NXP. However, the Company is confident that it can address the concerns raised by the European Commission and clear the deal. Qualcomm continues to expect this transaction to close by the end of 2017

Last Close Stock Review

At the closing bell, on Monday, June 12, 2017, QUALCOMM's stock was slightly up 0.77%, ending the trading session at $57.49. A total volume of 9.98 million shares were traded at the end of the day. In the last month and previous twelve months, shares of the Company have advanced 5.14% and 6.80%, respectively. Shares of the Company have a PE ratio of 19.13 and have a dividend yield of 3.97%. The stock currently has a market cap of $84.91 billion.

On Monday, June 12, 2017, the stock closed the trading session at $108.22, marginally down 0.33% from its previous closing price of $108.58. A total volume of 2.89 million shares have exchanged hands. NXP Semiconductors' stock price rallied 4.07% in the last three months, 10.26% in the past six months, and 22.38% in the previous twelve months. Furthermore, since the start of the year, shares of the Company have surged 10.42%. The stock is trading at a PE ratio of 19.97. At Monday's closing price, the stock's net capitalization stands at $37.44 billion.

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