Sat, Nov. 26, 9:11 AM
- It's no surprise that Republican administrations in general are seen as more friendly towards mergers than Democrats, and since the election, arbitrage spreads (the difference between a target's deal price and its current price) have tightened to the 8-9% range from 11%.
- However, on an annualized basis, there are still plenty of deals out there offering double-digit returns.
- Source: Vito Racanelli in Barron's
- Merger-arb shop WallachBeth Capital is fan of Harman International Industries (NYSE:HAR), which earlier this month drew a cash bid from Samsung for $112 per share vs. its close Friday of $109.74. Another pick is B/E Aerospace (NASDAQ:BEAV) which closed at $59.79 and has a cash and stock deal in hand from Rockwell Collins (NYSE:COL) for $62 per share.
- Lutetia Capital likes Cabela's (NYSE:CAB), which closed the week at $62.50 vs. Bass Pro Shops' $65.50 bid.
- The Merger Fund's Roy Behren is confident Qualcomm's (NASDAQ:QCOM) bid for NXP Semiconductors (NASDAQ:NXPI) will pass regulatory muster. NXP's close yesterday of $99.51 is a full 10.5% below the $110 cash offer. If the deal closes in nine months, it's an annualized return of 12.6%.
- Another deal with maybe overblown antitrust concerns is Danone/WhiteWave Foods (NYSE:WWAV). The spread is just 2%, but a close early next year would mean an annualized return over 10%.
- Seeking Alpha contributor Chris DeMuth stays on top of merger arb spreads with his M&A Daily.
Mon, Oct. 31, 9:36 AM
- Previously maintained Neutral rating and $55 price target (current price $68.40).
- Romit Shah likes scale and expansion of total addressable market resulting from NXP Semiconductors deal and highlights projected 30% accretion in earnings, to $6 per share, for 2018.
- Further considers Qualcomm not fully owned among institutional investors in comparison to peers (Applied Materials, Broadcom, Texas Instruments cited) and despite outperformance on the year so far, notes shares have performed below-sector and below-market for extended periods of time.
- Qualcomm (NASDAQ:QCOM) +0.80%, NXP Semiconductors (NASDAQ:NXPI) +0.06% at the open.
Fri, Oct. 28, 6:44 PM
- With the help of a very big deal -- AT&T's (NYSE:T) $85B offer for Time Warner (TWX -0.9%) -- companies have set a monthly record for merger and acquisition activity.
- Firms have agreed to M&A valued at more than $251B this month, Dealogic says. That surpasses a previous record month, July 2015, at $240B. The tech sector (signified most recently by Qualcomm's (QCOM -2.4%) $39B deal for NXP Semiconductors (NXPI +0.7%)) has accounted for a fourth of U.S.-targeted deals and 19% by value, just ahead of healthcare.
- Last week was especially hot, with $177B in activity (itself a record for an M&A week).
Thu, Oct. 27, 6:52 AM
- Qualcomm (NASDAQ:QCOM) has agreed to buy NXP Semiconductors (NASDAQ:NXPI) in a deal that values the chip maker at $110 a share, or $47B, including debt, as it seeks to expand the reach of its chips from phones to cars.
- The combined company is expected to have annual revenues of more than $30B, serviceable addressable markets of $138B in 2020 and leadership positions across mobile, automotive, IoT, security, RF and networking.
- QCOM +2.1%; NXPI +3.2% premarket
Fri, Oct. 21, 9:52 AM| Fri, Oct. 21, 9:52 AM | 76 Comments
Thu, Oct. 20, 3:02 PM
- Qualcomm and NXP Semiconductors (NASDAQ:NXPI) were considered to be off by less than 10% regarding valuation two weeks ago.
- Bloomberg's now reporting a deal may be announced sometime next week.
- Qualcomm (NASDAQ:QCOM) shares higher by 2.25% on the day, 1.85% of which has been realized over the last ten minutes.
- Update: All-cash deal under consideration, disclosure before Qualcomm's November 2 earnings suggested.
Thu, Oct. 6, 2:36 PM
- Bloomberg notes NXP Semiconductors (NXPI +1.6%) and Qualcomm (QCOM +1.5%) are off by less than 10% in terms of valuation.
- Deal structure of 75% cash, 25% stock cited as preferred by Qualcomm with an all cash deal preferred by NXP. Qualcomm looking at $110 per share, NXP at $120.
- Qualcomm considered only takeover-interested party to be involved.
- Development is notable with the situation reportedly not imminent just hours ago.
Fri, Sep. 30, 10:22 AM
- RBC Capital Markets analyst Amit Daryanani notes a deal would mark a good use of cash for Qualcomm, increase its portfolio diversity, allow it to leverage IoT plans into automotive and other sectors and potentially offer material accretion over upcoming years. On the other end, Daryanani points out some concerns for Qualcomm relating to debt position and integrations of NXP Semiconductors stemming from the latter's recently closed Freescale merger.
- Bernstein's Stacy Rasgon and Jefferies' Mark Lipacis comment on potential buyout prices, offering respective approximate $120 and $136-$172 ranges.
- NXP Semiconductors (NXPI +7.1%) is trading higher by around 25% since mid-day yesterday while Qualcomm (QCOM +2.9%) is up over 10% on the same term.
Thu, Sep. 29, 1:17 PM
Mon, Jun. 13, 6:45 PM
- A Chinese consortium featuring JAC Capital and Wise Road Capital is buying NXP's (NASDAQ:NXPI) Standard Products unit for $2.75B. Bloomberg reported in April the business is on the block, and that NXP "may seek at least $2 billion" for it.
- The deal is expected to close in Q1 2017. Standard Products, which supplies analog and power management chips for numerous end-markets, saw revenue drop 15% Y/Y in Q1 to $274M. Its 2015 revenue totaled $1.2B.
- ~11K workers, manufacturing facilities in the U.K. and Germany, and back-end facilities in China, Malaysia, and the Philippines will be transferred as part of the deal. NXP says the sale will allow it to "continue to focus on its High-Performance Mixed Signal business, furthering our Secure Connections for a Smarter World strategy." Last year, JAC bought NXP's base station power amplifier business for $1.8B, a deal that was needed to win regulatory support for the Freescale acquisition.
Dec. 7, 2015, 1:26 PM
- Less than two weeks after Chinese and U.S. approval was announced, NXP (NXPI -3.4%) and Freescale (FSL -2.8%) have officially closed their merger, a deal that's one of the chip industry's largest in history and which creates the biggest player in the fragmented microcontroller market.
- As previously announced, NXP is paying $6.25/share in cash + 0.35 shares (current value of $30.60) for each Freescale share. NXP forecasts immediate EPS accretion and $200M/year in 2016 cost synergies, with "a clear path" to $500M/year in synergies.
- NXP and Freescale are off on a day the Nasdaq is down 1%. During a Bloomberg interview, NXP CEO Richard Clemmer promises the post-merger company "can outgrow the semiconductor industry by 50%."
Nov. 27, 2015, 2:08 PM
- NXP Semiconductors (NASDAQ:NXPI) jumped 4.6% in the short session today, and Freescale (NYSE:FSL) gained 4%, after the two won approval from China's Ministry of Commerce to finish their $40B merger -- a last major hurdle to the deal.
- The EU and U.S. FTC had signed off previously. The companies now expect to close Dec. 7, concurrent with the divestment of NXP's RF amplifier unit.
- The two have predicted $500M in eventual annual cost synergies, and have targeted $200M in cost savings in the first year after closing. NXP expects it to be accretive to EPS and free cash flow.
- Previously: NXP +6%, Freescale +5.5%; U.S. clears NXP's RF amplifier unit sale (Nov. 24 2015)
- Previously: NXP rallies following FBR Top Pick call, takes Freescale with it (Nov. 18 2015)
Nov. 24, 2015, 10:35 AM
- The Committee on Foreign Investment in the United States (CFIUS) has signed off on the $1.8B sale of NXP's (NASDAQ:NXPI) base station RF amplifier unit to China's JAC Capital.
- The sale, announced in May, is now expected to close on Dec. 7. It's meant to address antitrust concerns about NXP and Freescale's (NYSE:FSL) combined base station amplifier share following their planned merger.
- NXP and Freescale have jumped in response to the news. The companies are still targeting a 2H15 close for the merger; EU regulators approved it in September.
Sep. 17, 2015, 1:10 PM
- As expected, the EU has signed off on NXP's (NXPI +0.6%) pending cash/stock merger with Freescale (FSL +0.6%). Shares of both companies have risen slightly in response.
- Regulators note the $1.8B sale of NXP's base station power amplifier unit to China's JAC Capital addresses antitrust concerns related to NXP/Freescale's combined base station amplifier share. The deal will still create a huge player in the microcontroller market - Gartner estimates Freescale and NXP were the market's #2 and #5 players in 2014 - but plenty of competition exists.
Jul. 2, 2015, 2:05 PM
- As expected, NXP (NXPI -0.1%) and Freescale (FSL +0.2%) shareholders have signed off on the companies' cash/stock merger. In addition, NXP has added Glen Capital Partners' Greg Summe and Permira Advisers partner Peter Smitham to the board, effective as of the merger's closing.
- NXP/Freescale still expect the deal to close in 2H15. As previously announced, Freescale shareholders will receive $6.25 in cash and 0.35 NXP shares for each share they own - at current levels, that spells a payout of $40.58/share.
- In May, NXP reached a $1.8B deal to sell its RF Power unit to China's JAC Capital, thus appeasing regulators worried about NXP/Freescale's combined base station power amplifier share.
May 28, 2015, 6:18 PM
- Continuing a string of chip asset purchases by Chinese firms, Beijing's JAC Capital is buying NXP's (NASDAQ:NXPI) RF Power unit (makes base station power amplifiers) for $1.8B in cash. The deal is expected to close in 2H15.
- NXP will use the proceeds to help pay for the $2B cash portion of its pending acquisition of Freescale (NYSE:FSL). With Freescale also a major player in the base station amplifier market, NXP had previously announced it would sell its RF unit to keep regulators happy.
- Pac Crest (Overweight) notes JAC is paying ~4x sales (in-line with peer valuations), and that the deal price is towards the high end of the $1B-$2B range estimated by the firm. It sees a $0.40 dilutive impact to 2016 EPS. Bernstein (Outperform) was only expecting a sale to reap $500M-$1B.
- NXP and Freescale both closed up fractionally today following the announcement. They rallied yesterday with the help of Broadcom/Avago merger reports (confirmed this morning).