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Qualcomm Ended NXP Acquistion After Failing To Secure Chinese Approval (cnet.com)
hackingbear writes: Qualcomm officially terminated the deal to buy Dutch semiconductor giant NXP after failing to get a decision from regulators in China by its deadline. It must now shell out a previously agreed upon $2 billion termination fee. The Chinese market accounts for 30% of Qualcomm's revenue. China's refusal of the approval can also be a retaliation against an $1.4 billion penalty against ZTE imposed by the U.S. Department of Commerce over technicalities of ZTE's violation of Iran sanctions, a move viewed by China as a U.S. excuse to launch a trade war. "It's a reminder that trade wars are maybe not that easy to win," says Steven Roach of Morgan Stanley. "And China has a lot of ammunition up its sleeve." Roach urged the Trump administration to understand that the U.S. and China "need each other," saying low-price Chinese imports are needed to "make ends meet" for cash-strapped Americans. Separately, in a hearing at the Office of United States Trade Representative for imposing additional tariffs on Chinese imports due to the alleged intellectual property theft by China, an accusation that the U.S. itself had committed, out of some 61 figures from the country's chemical, electronics, and solar energy sectors, only six expressed their support for the move.
What gets me is the size of the 2 billion dollar termination fee for a deal only worth 44 billion dollars in total.
A termination fee is only supposed to cover the cost of due diligence and legal preparations leading up to the takeover or merger.. In some cases the boards establish an excessive termination fee to ensure shareholders approve a deal, because they know the company will receive a crippling penalty if they don't give approval.
I've read that a reasonable termination fee should not exceed 2 per cent of the total value or $880 million in this case (still way too high IMO).
Those criticizing Trump's war are really saying "DON'T ROCK THE BOAT!". Those who negotiated US trade policies are making handsome profits and could care less about the effect it has on those at the bottom of the ladder. And it's those who sink billions of dollars into the US political system who create the trade policies and then make sure their paid political stooges earn those millions it took to put them in office. The politicians can't balance their own checkbooks so they have no clue what the result of the policies they take their marching orders and place their masters votes. Nobody is arguing that the current trade policies are fair they arguing for leaving things the way they are. It doesn't matter that the US has been the side who makes the sacrifices so the other countries can have their demands met. After all the US is big and powerful so certainly it should be willing to share a little of the prosperity for those in need. China negotiates like they are some 3rd world country barely scrapping by while subsidizing every industry in the country, manipulating it's currency to set it's export prices, forcing IP turnover if a country wants access to the domestic Chinese economy, while stealing every piece of technology and every piece of intellectual property they can get their hands on. I like how the article mentioned "alleged" when talking about the rampant theft China commits on a daily basis across the world. It's like saying it is "alleged" that the Earth orbits the Sun.
Trump sucks as a President but his Presidency has given the international community the swift kick in nuts they have needed. You want to be considered a US "Allie"? What does the US get out of the deal? He has demonstrated just how much respect the Senators and Representatives deserve. After all it is these lofty politicians with no term limits and no limits on campaign donations who have ran the country into the ground. A President doesn't have the power to do 1% of the amount of damage those assholes in Congress can do. And the major news media comes into a close second place when it comes to wreaking havoc on the country. Trump's Presidency forced those assholes out of the closet and into the spotlight where their bias and lack of objectivity is there for all to see. And then their are the professional political commentators and experts who never entertained the slightest thought that Trump would beat Clinton. That's a pretty strong indictment of their job performance and instead of being fired for gross incompetence they are still in the spotlight 24/7 pretending to be experts. And all the various forces who have been trying to forment a governmental coup are in danger of over playing their hand and they are to stupid to see the consequences of their actions. They seem to think that as soon as Trump is gone things will go back to the way it used to be. That ship has already sailed. The hyper polarization and governmental incompetence is going to be even worse after Trump. People should have accepted that the President has a 4 year term and then let his record prevent him from winning or even running for re-election. The losers of the last election have not addressed any of their policy missteps that resulted in them losing the last election. And their missteps were so fucking bad that a person like Trump was able to beat them. That says more about the losers than it does about Trump if you think about it. Believe it or the US has had worse Presidents than Trump and survived and even prospered. The greatest President who was elected 5 times broke every rule in the book when he ran the country. He openly defied and ignored every Congressional law aimed at keeping the US out of WW2. Had the Japanese not committed one of the stupidest actions in military history the world might look a little different today. To try and bring the country out of the Depression era he used his upper class status and family contacts to get the 5
wealthiest industrialists in the US to revitalize the US consumer economy. And he was a fucking Democrat!