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Qualcomm admitted defeat in its attempted $44bn takeover of Dutch chipmaker NXP, after failing to win approval from Chinese regulators for what would have been the semiconductor industry’s largest ever takeover.

The companies’ agreement expired just before midnight in New York on Wednesday without any indication that they had obtained antitrust clearance from Beijing, despite the deal getting sign-off from eight other regulators around the world.

After being shielded by the Trump administration from  Broadcom’s hostile approach four months ago, Qualcomm has now become the highest-profile American victim of the US-China trade war. China’s inaction on regulatory approval has been seen as retaliation for President Donald Trump’s  tariffs on Chinese imports.

Steve Mollenkopf, Qualcomm’s chief executive, conceded defeat earlier on Wednesday after a two-year effort to close the NXP tie-up. Instead, he announced a $30bn share buyback programme.

Mr Mollenkopf said that Qualcomm ultimately decided that there was not a 「high probability」 of a near-term change in the 「current geopolitical environment」 that would allow the deal to close. Qualcomm plans to complete a 「large majority」 of its $30bn share buybacks before the end of its fiscal 2019, in September next year.

The company on Wednesday also reported results that were 「significantly above our prior expectations」. Revenues increased 6 per cent to $5.6bn, ahead of Wall Street’s estimates, with net income up 41 per cent to $1.2bn. Qualcomm’s shares jumped 6 per cent in after-hours trading.

NXP’s shares extended their decline in after-hours trading after Qualcomm said it would not pursue the takeover, sliding to roughly $96 — above a low hit in May as the deal fell into doubt and the Dutch chipmaker missed quarterly earnings expectations. Failure to complete the transaction will trigger a $2bn break-up fee that Qualcomm must pay immediately to NXP.

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Published on our website on Thursday, 28 July, 2017