QCOM QUALCOMM Inc

By Ben Dummett and Ted Greenwald 

Qualcomm Inc. raised its bid for NXP Semiconductors NV to about $44 billion and locked up support from key investors, as the chip maker seeks to fend off a $121 billion hostile takeover approach by Broadcom Ltd.

Qualcomm, based in San Diego, increased its bid for NXP to $127.50 a share. It also lowered the threshold for NXP shareholder support to 70% from 80%, making it easier to complete the deal.

The move, announced Tuesday, sets up a March 6 showdown after months of sniping between Qualcomm and Broadcom, which has put forth its own slate of directors for Qualcomm investors to vote on at the company's annual shareholder meeting.

The elevated NXP offer came nearly a week after Broadcom and Qualcomm executives sat down together for the first time since Broadcom launched its takeover effort. The meeting seemingly resulted in no progress toward an agreement. Qualcomm has said Broadcom's $121 billion bid undervalues it, and that it likely would run into trouble gaining regulatory approvals.

In a statement Tuesday, Broadcom said Qualcomm's higher NXP bid "demonstrates the Qualcomm board's disregard for its fiduciary duty" to its shareholders. The statement didn't address whether Broadcom would continue its pursuit.

Broadcom Chief Executive Hock Tan has said his offer for Qualcomm stands regardless of the NXP purchase, though he has threatened to withdraw if Qualcomm increased the price above the original $110 a share. Mr. Tan appeared to soften that stance last week in an appearance on CNBC, saying in that event he would preserve his options.

Qualcomm's new NXP bid appeased Elliott Management Corp. and several other hedge funds that had argued the $110-a-share offer was too low. New York-based Elliott, which owns a 7.2% stake in NXP, had been among the most vocal advocates for a higher price, arguing NXP, the world's largest developer of chips for automobiles, was worth at least $135 a share. It cited NXP's better-than-expected fourth-quarter earnings among other factors.

Elliott on Tuesday said it agreed to tender its shares in NXP in response to Qualcomm's higher offer. Qualcomm said it obtained binding agreements from other shareholders as well, for a total of 28% of outstanding NXP shares.

The higher NXP bid was seen as a necessary step for Qualcomm to win support from shareholders. Since the summer, shares of the Dutch automotive chip specialist have been trading above Qualcomm's original offer of $110 a share, or $39 billion.

On Tuesday, Qualcomm shares sank 4.2% to $62.11, while shares of NXP jumped 6.2% to $125.78. Broadcom shares were up 2.3% to $254.72.

The Wall Street Journal reported earlier Tuesday that Qualcomm was set to sweeten its offer.

Qualcomm's offer "reduces the chances that a Broadcom deal would go through at $82 a share," weighing on Qualcomm's stock, said Chris Caso, an analyst with Raymond James Financial Inc.

The NXP deal has been wending its way through international regulatory approvals for more than a year. It awaits approval by Chinese antitrust authorities -- its last regulatory hurdle. During that time, NXP investors bid up the stock, and some shareholders withdrew their shares, putting pressure on Qualcomm to raise its offer.

Qualcomm is looking to NXP to broaden its product line beyond its smartphone stronghold to automobiles, security and internet-connected devices, combined markets the company says will be worth $77 billion by 2020.

On its recent earnings call, Qualcomm estimated it would take three weeks to wrap up the acquisition once China approves the deal.

"We are working hard to complete this transaction expeditiously," Chief Executive Steve Mollenkopf said Tuesday.

Write to Ben Dummett at ben.dummett@wsj.com and Ted Greenwald at Ted.Greenwald@wsj.com

(END) Dow Jones Newswires

February 20, 2018 11:33 ET (16:33 GMT)

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