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.

Comments

The con artist should know

[quonset]

low-price Chinese imports are needed to "make ends meet" for cash-strapped Americans.

It's why he has his name brand clothes made in China rather than U.S. and until recently, so did his daughter.

Funny how the con artist touts made in America yet refuses to have his stuff made here.

Two Beellion! dollars

[godel_56]

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).

Re:Two Beellion! dollars

[Snuggles]

It was not just a DD+legal, NXP divested their standard products and small signal stuff as Nexperia and imported some of the culture and practices of giving out technical information to SME customers.
I know quite a few companies that dropped NXP out from their design-in process due to merger, which causes long term damage. They also EOLed number of special discretes, but that was unfortunately to be expected and many companies bought lifetime supplies when the deal was announced.

Re:Logical

[tlhIngan]

The Chinese learnt from the ZTE case that yu should do as little as possible buisiness with American companies. NXP is now a Dutch company, but it would become a US company subject to their idiot sanctions. Trump tried to prevert sanctions against ZTE but congress didn't let him. So now the US gets repaid for the congress decision.

Good, because ZTE violated all sorts of regulations that were inposed on it.

The only reason Trump supported ZTE was China invested $500M into Trump hotels and granted Ivanka Trump a rare Chinese trademark. That's it. A little backroom dealing and let's forget that we asked you nicely to not resell those parts to places we asked you not to. And it's not like it was the first time, either.

If you ever wonder why Trump seems to care for Putin, again, remember Russia is one of the few places where Trump's business are actually succeeding, quite well in fact. Everywhere else they are doing terribly. All this from a President who has not divested himself of his businesses while in power.

Congress simply grew a backbone and enforced the order. Or shall we say, China did not scratch their backs obviously.