Shares of Qualcomm (QCOM) this morning are down $1.85, or 3%, at $63, in early trading, after it announced a short while ago it will increase its purchase price for NXP Semiconductors (NXPI) to $127.50 from $110, while also lowing the number of shares Qualcomm needs to have tendered to it.
NXP shares are up $7.36, or 6% at $125.86.
Qualcomm first made the $110 bid back in October 27th of 2016.
The regulatory process has dragged along, during which Qualcomm itself became the subject of a hostile takeover by Broadcom (AVGO). Qualcomm again rejected Broadcom's $82-per-share cash-and-stock offer last week, after the two met on Wednesday to discuss. Qualcomm has said it is open to further talks with Broadcom.
The new bid of $127.50 is above the $110 at which Broadcom has said Qualcomm must cap its bid in order for the two to proceed with their own deal. Analysts have said that Qualcomm likely sees closing the NXP deal as important in advance of its annual meeting on March 6th, at which Broadcom is trying to get Qualcomm holders to replace the board of directors.
Qualcomm says it has agreed with NXP's board of directors that Qualcomm only needs to get a minimum of 70% of NXP's shares to close the deal, down from the 80% previously.
The company also said it reached an agreement with nine NXP shareholders who "collectively own more than 28% of NXP's outstanding shares."
Broadcom over the weekend got its own lift, as International Shareholder Services advised Qualcomm holders to vote "yes" for four of six nominees to Qualcomm's board of directors on March 6th, according to a statement issued a short while ago by Broadcom.
The recommendation for four votes would be short of the majority of votes that Broadcom has said is essential, on Qualcomm's 9-member board.
And so Broadcom said in its statement this morning that it was "pleased" with ISS's recommendation, but that "it is important that Qualcomm stockholders vote for ALL six Broadcom nominees on the BLUE card to elect a majority of new board members so that Qualcomm stockholders will have the opportunity to obtain the benefit of Broadcom's best and final offer for Qualcomm of $82 per share."
Broadcom shares are down 40 cents at $248.49.
In a note to clients this morning, Vijay Rakesh with Mizuho reiterates a Buy rating on Broadcom, writing that the the vote of confidence from ISS is "a small win for AVGO." He points to the March 6th Qualcomm meeting as the next "key" event in the drama.
StacyRasgon of Bernstein, who has an Outperform rating on Broadcom shares, and a Market Perform on Qualcomm, writes that it's unlikely Broadcom will walk away from its bid for Qualcomm even though Qualcomm is raising its NXP bid:
We will see what AVGO does now. While their current offer is "premised" on NXPI going at $110, they would of course not necessarily be precluded from making a new offer premised on the new NXPI price. Given Broadcom has insisted that $82 is "best and final," we think raising it likely remains unpalatable, though it is possible they leave it there (equivalent to a ~$4/share effective raise given the additional ~$6B in capital that will go out for NXPI); it is also possible they play hardball and lower it by that amount (to keep their total consideration unchanged). We don't think they toss it and walk though. We would hope for further engagement between the two companies, though their sit-down together last week does not appear to have been incredibly fruitful so we aren't holding our breath.
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