Nearly two years after announcing its intention to buy Dutch chip company NXP Semiconductors for $44 billion, Qualcomm said today that it’s dropping that bid after failing to get China’s approval of the deal.
China was the last of nine markets that Qualcomm needed to approve the purchase. In its quarterly earnings statement released today, Qualcomm said that in absence of China’s approval by the end of the day, it will terminate the transaction and pay NXP a $2 billion termination fee.
The company also said it would spend up to $30 billion in a share buyback program to placate shareholders.
Qualcomm’s purchase of NXP was viewed as an attempt by the company to diversify and make it less dependent upon the cell phone market. NXP sells mixed-signal semiconductors to a large number of segments including the automotive and smart-home markets.
Qualcomm has faced an uphill battle to close the NXP deal. The company had originally hoped to close the transaction by the end of 2017. But in December it announced that it was extending its offer period until January because it hadn’t secured the necessary regulatory approvals and was also battling with an activist investor. Closing of the deal was later extended until April.
But in April it appeared that China’s antitrust regulator was negative in its review of the deal causing many to speculate that Qualcomm’s purchase of NXP was being politicized because of the growing trade tensions between China and the U.S. At that time the two companies agreed that they would call off the deal if they could not win China’s approval by July 25.
This isn’t the first time Qualcomm has been caught in the crosshairs of the government’s dealings with China. Just a few months ago President Donald Trump issued an executive order blocking Broadcom’s $117 billion hostile takeover bid of Qualcomm because of security concerns. The executive order stated that the reason for blocking the deal was that there is “credible evidence” that Broadcom, through its control of Qualcomm, might impair U.S. national security.