Qualcomm Inc may win European Union approval for its takeover of NXP Semiconductors NV by the end of the year after striking a final deal with regulators on patent licensing issues, according to people familiar with the review. Regulators have dropped their concerns after accepting Qualcomm’s pledge not to acquire standard essential and system-level patents belonging to NXP, according to one of the people, who asked not to be identified because the negotiations are private. Winning EU approval for the $47 billion deal could bolster the company’s defense against a multibillion-dollar bid from Broadcom Ltd.
EU approval for the NXP deal would be “a huge relief for Qualcomm,” by adding an automotive chip business that gives it “a much bigger and more diverse empire to oversee” that might be helpful to convince investors of its strategy as it tries to ward off the Broadcom bid, said Anand Srinivasan, an analyst at Bloomberg Intelligence. NXP’s overlaps with Broadcom would also add another front to regulatory scrutiny of a Qualcomm-Broadcom tie-up.
Qualcomm and the European Commission declined to comment. NXP didn’t immediately respond to requests for comment. The company is promising to maintain current licensing terms for NXP’s Mifare technology, used in swipe cards for the London Underground, and to ensure NXP chips remain interoperable with others. The EU tested concessions Qualcomm submitted last month, which won over some of the initial critics of the deal, another person said.
While Qualcomm and NXP aim to close the deal by the end of the year, there’s “a potential for the close to slip into 2018 based on the current status of approvals,” NXP Chief Executive Officer Rick Clemmer said earlier this month. Qualcomm CEO Steve Mollenkopf has said the companies are “constructively working with each remaining regulator.” EU and Chinese antitrust authorities are the largest hurdles the deal must clear.
Completing the NXP purchase quickly might make Qualcomm more difficult for Broadcom to swallow, adding an overlap on Wi-Fi chips for regulators to scrutinize. Qualcomm rejected a $105 billion offer earlier this week, telling shareholders that the bid undervalued the company and “comes with significant regulatory uncertainty.” Broadcom has said its offer stands whether or not Qualcomm can wrap up the NXP deal on current terms.
While Qualcomm is said to be winning over opponents to its NXP deal behind the scenes in Brussels, the EU’s review process is currently in limbo. Regulators stopped the clock on the deal in August as they demanded more information from the companies. The review, however, could be restarted as soon as Friday, one person familiar with negotiations said.
A restart would add at least three months to the previous December 6 deadline for the EU to make a decision. EU merger decisions usually come a few weeks before the deadline. Qualcomm’s Mollenkopf said earlier this month that the delays in Europe were “nothing unexpected or surprising in that process for an acquisition of this size.”