Qualcomm confirmed it was terminating its proposed takeover of Dutch counterpart NXP on Thursday after China failed to grant it regulatory approval
American chipmaker Qualcomm (QCOM) confirmed it was terminating its proposed takeover of Dutch counterpart NXP (NXPI) on Thursday after China failed to grant it regulatory approval.
Qualcomm said it would proceed with a stock buyback of up to $30 billion that it had promised shareholders should the NXP deal fall apart. NXP also announced Thursday that it would buy back shares worth $5 billion.
The companies had been waiting nearly two years for their deal to clear global regulatory hurdles. The takeover had been approved in eight other jurisdictions, including the European Union and South Korea, since it was announced in October 2016. China was the lone holdout.
The final deadline was midday Thursday in China, and Beijing's Ministry of Commerce simply let the clock run out.
Gao Feng of the Chinese Commerce Ministry during a news conference in Beijing in April
At a weekly press conference later in the day, Commerce Ministry spokesman Gao Feng ducked questions about the deal, advising reporters to check with market regulators for details on China's decision.
"This case is about the enforcement of antitrust laws. It has nothing to do with China-US trade," Feng said, according to Chinese state media.
China's State Administration for Market Regulation did not respond to a faxed request for comment.
Qualcomm had already warned investors that the deal would likely fall through. CEO Steve Mollenkopf said during an earnings call Wednesday that the company would not extend the deadline.
Continued uncertainty surrounding such a large deal "introduces heightened risk," Mollenkopf said. "We weigh that risk against the likelihood of a change in the current geopolitical environment, which we didn't believe was a high probability outcome in the near future."
The San Diego-based company, which employs more than 33,000 people, is now stuck with paying NXP a $2 billion breakup fee. Qualcomm will make the payment on Thursday, according to NXP.
The companies had been waiting nearly two years for their deal to clear global regulatory hurdles. The takeover had been approved in eight other jurisdictions, including the European Union and South Korea, since it was announced in October 2016. China was the lone holdout.
Qualcomm had already warned investors that the deal would likely fall through. CEO Steve Mollenkopf said during an earnings call Wednesday that the company would not extend the deadline.
