After almost two years of trying to purchase NXP Semiconductors, Qualcomm has finally given up on the acquisition after failing to receive China's approval.
The Chinese government has held up the deal for some time and now the chip giant has decided to back out of the agreement completely. Unfortunately Qualcomm will have to pay a breakup fee of $2bn but this beats the alternative of trying to continue fighting to complete the acquisition.
The two companies first entered into a deal back in 2016 when Qualcomm agreed to pay $47bn for NXP. Despite receiving approval from the EU and Korea, the chipmaker had to push back the deadline to close the deal as it waited for China to approve or deny the merger.
The deal is set to reach its deadline again but without any word from China, Qualcomm has revealed that it does not plan to extend it. The company's CEO Steve Mollenkopf confirmed its decision to back out of the deal in a statement announcing its third quarter earnings, saying:
“We intend to terminate our purchase agreement to acquire NXP when the agreement expires at the end of the day today, pending any new material developments.”
After paying the breakup fee, Qualcomm plans to use the $30bn set aside for the deal in a stock repurchase program.
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