Elliott Says NXP Worth $135M Per Share As Broadcom Commits To Qualcomm Deal
Shares of NXP Semiconductor (NXPI), Qualcomm (QCOM) and Broadcom (AVGO) are in focus after Elliot Advisors said Qualcomm's takeover bid "is acting a ceiling on NXP's valuation" and Broadcom reaffirmed its commitment to a Qualcomm transaction.
ELLIOTT SAYS NXP WORTH $135 PER SHARE: Elliott Advisors, which has a stake of about 6% in NXP, released a letter to shareholders and a presentation making the case that it believes NXP is worth $135 per share on an intrinsic standalone basis. The hedge fund it believes NXP's "prospects are bright. Approximately half of NXP's revenue is exposed to exciting growth engines of the semiconductor market --automotive and industrial." Elliott, which said Qualcomm's offer of $100 per share is "acting as a ceiling on NXP's valuation," has retained UBS to conduct a financial analysis on NXP and that it would share the report with other shareholders "shortly."
QUALCOMM RESPONDS: Qualcomm issued a statement in response which said it believed that the agreed-upon price of $110 is "full and fair," and that it remained "fully committed" to closing the acquisition of NXP. "Elliott's value assertion for NXP is unsupportable and is clearly nothing more than an attempt to advance its own self-serving agenda," Qualcomm stated.
BROADCOM'S PROPOSED TAKEOVER OFFER TO QUALCOMM: Since offering to buy NXP, Qualcomm has been the target of an acquisition approach from Broadcom. On November 6, Broadcom announced a proposal to acquire Qualcomm in a transaction valued at approximately $103B on a pro forma basis. The company said the proposal stands whether Qualcomm's acquisition of NXP is consummated on the current terms or the transaction is terminated. On November 13, Qualcomm said its board rejected the unsolicited proposal. "It is the board's unanimous belief that Broadcom's proposal significantly undervalues Qualcomm relative to the company's leadership position in mobile technology and our future growth prospects," said Paul Jacobs, chairman of the board.
BROADCOM BOARD NOMINATIONS: On December 11, Broadcom filed preliminary proxy materials with the SEC regarding its planned solicitation of proxies to elect 11 independent nominees to Qualcomm's board at its 2018 annual meeting of stockholders. Broadcom also filed a premerger notification under the Hart-Scott-Rodino Antitrust Improvements Act regarding the proposed acquisition. Hock Tan, president and CEO, said, "Our board and management team are committed to consummating this transaction as soon as possible. We continue to receive positive feedback from stockholders and customers, and we have made clear to Qualcomm that it remains our strong preference to engage in constructive dialogue regarding the value-enhancing proposal we put forward more than a month ago."
PRICE ACTION: Shares of NXP rose 0.8% to $116.20, Qualcomm rose 0.7% to $64.70 and Broadcom was up 0.7% to $261.61 in morning trading.