Qulacomm Inc. has announced that it will be acquiring NXP Semiconductors NV in order to fast track its way into the automotive industry as it tries to expand beyond the smartphone market.
The deal is valued at around $47 billion with Qualcomm agreeing to pay $110 a share for NXP. The company will be paying with a mixture of cash on hand and new debt at a price per share that is 11 per cent higher than what semiconductor company's shares were trading for when the market closed on Wednesday.
Qualcomm's CEO, Steve Mollenkopf, is taking a risk on the deal which is the largest in the company's history. However, he believes that it will save the company money in the long run and will allow it to carve out a place for itself in the emerging market for electronics in cars.
During an interview, Mollenkopf revealed Qualcomm's reasoning behind the deal, saying: “It's no secret that we've been looking around. If you look at our growth strategy it's to grow into adjacent markets at the time that they are being disrupted by the technology of mobile.”
The demand for smartphones has slowed in recent years which has forced the company to explore other industries that could utilise its chips. By acquiring NXP, the company will be able to diversify its offerings and potentially position itself as one of the leaders in this new industry.
Mollekopf has stated that he wishes to combine the two companies as well as their products as quickly as possible. Once Qualcomm and NXP are combined, representatives from both companies will be present to ensure that both sides of the business run smoothly following the transition.
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