Qualcomm agreed to acquire all of the issued and outstanding shares of NXP for $110.00 per share in cash, representing a total enterprise value of approximately $47 billion. The deal will be financed through cash on hand and $11 billion in new debt. The companies expect total annualized synergies of $500 million within two years of close.
NXP Semiconductors N.V., which headquartered in Eindhoven, Netherlands, employs approximately 45,000 people in more than 35 countries and is known for its mixed-signal semiconductor electronics. The company was known as Philips Semiconductor prior to 2006.
Key markets include automotive, broad-based microcontrollers, secure identification, network processing and RF power. NXP has a broad customer base, serving more than 25,000 customers through its direct sales channel and global network of distribution channel partners.
For Q3 2016, NXP reported revenue of $2.469 billion, up 4.4% over a year ago, and GAAP gross profit of $1.184 billion, up 7.7% over a year ago.
The combined company is expected to have annual revenues of more than $30 billion, serviceable addressable markets of $138 billion in 2020 and leadership positions across mobile, automotive, IoT, security, RF and networking.
"With innovation and invention at our core, Qualcomm has played a critical role in driving the evolution of the mobile industry. The NXP acquisition accelerates our strategy to extend our leading mobile technology into robust new opportunities, where we will be well positioned to lead by delivering integrated semiconductor solutions at scale," said Steve Mollenkopf, CEO of Qualcomm Incorporated. "By joining Qualcomm's leading SoC capabilities and technology roadmap with NXP's leading industry sales channels and positions in automotive, security and IoT, we will be even better positioned to empower customers and consumers to realize all the benefits of the intelligently connected world."
Qualcomm also noted that the acquisition is a tax efficient use of its offshore cash.
The deal creates the largest supplier of semiconductors for the automotive industry and the No.1 supplier of general microcontrollers (MCUs).
The combined company will capitalize on the growing opportunities created by the accelerating demand for security, connectivity and processing. NXP estimates annual cost synergies of $500 million.
"Today's announcement is a transformative step in our objective to become the industry leader in high performance mixed signal solutions. The combination of NXP and Freescale creates an industry powerhouse focused on the high growth opportunities in the Smarter World. We fully expect to continue to significantly out-grow the overall market, drive world-class profitability and generate even more cash, which taken together will maximize value for both Freescale and NXP shareholders," said Richard Clemmer, NXP Chief Executive Officer. Mr. Clemmer will continue to be the President and Chief Executive Officer of the merged company.