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Qualcomm to refile China antitrust application for $44 billion NXP takeover - sources

Reuters  |  BEIJING 

By Matthew Miller

(Reuters) - U.S. chipmaker will refile as early as Monday an with the to clear its $44 billion takeover of NXP Semiconductors, sources said, giving regulators more time to decide on the deal and averting a collapse.

The San Diego-based firm withdrew its earlier antitrust on Saturday at the request of China's commerce ministry, just days before the regulator's April 17 deadline to decide on the transaction expires, the sources said.

Clinching the NXP takeover, the world's biggest in the sector, is crucial to Qualcomm, which is seeking to diversify its customer base and become the leading to the fast-growing automotive market.

The U.S. chipmaker has already received approval from eight of nine required global regulators to finalise the acquisition, with Chinese clearance the only one pending.

By refiling, will provide the (Mofcom) potentially with another six-month window to review its It will be the second time would be refiling its antitrust application with Mofcom.

Analysts, however, said a decision by Mofcom on the deal is unlikely to come before trade and investment tensions between and the are resolved.

"Qualcomm is going to have to wait for and to resolve their differences before this deal is going to move forward," said Erick Robinson, director of patent litigation and licensing at East IP.

Earlier this month, the administration of U.S. proposed $50 billion worth of tariffs on some 1,300 industrial, technology, transport and medical products to force changes in Beijing's intellectual property practices.

Beijing immediately responded with a list of proposed duties of $50 billion on key American imports.

China's isn't blocking the deal, "but they are holding it hostage", said Andrew Gilholm, director of analysis for and at risk consultancy Control Risks, adding he had heard about Qualcomm's application withdrawal and planned refiling.

Qualcomm was facing the "perfect storm" for a U.S. company in China, he added. "It's at the heart of everything: there's a national security angle, there's a competitive and Chinese industrial policy angle - so it's caught up in all the trade war stuff."

Qualcomm declined to comment. Mofcom didn't immediately respond to a request for comment.

Antitrust concerns were believed to have been raised during the most recent round of discussions, but Qualcomm's position was these were unfounded and not related to the deal, the sources said.

Qualcomm is understood to have offered a series of guarantees to Mofcom to assure that NXP customers wouldn't need to also purchase Qualcomm licenses.

The U.S. chipmaker, which initially announced its bid for the Dutch company in October 2016, said in February that it was raising its bid to $127.50 per share, valuing NXP at $44 billion.

That sweetener came weeks before Trump, citing national security, ordered rival to halt its proposed $117 billion buyout of Qualcomm.‍​

Shares in Qualcomm have dropped about 13 percent since the start of the year, while NXP stock has shed about 3 percent over the same period.

(Reporting By Matthew Miller; Additional reporting by Jourdan in Shanghai and Yawen Chen in Beijing; Editing by Muralikumar Anantharaman)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Mon, April 16 2018. 12:55 IST