Qualcomm reportedly closing in on $37B deal to buy NXP


Qualcomm is reportedly closing in on a deal to acquire rival NXP Semiconductors for roughly $37 billion.

The acquisition, which The Wall Street Journal first reported and then Reuters picked up today, values NXP at $110 per share and could be announced in the next week, according to an unnamed source. Qualcomm is the third-largest chip vendor in the world in terms of revenue, according to IHS. NXP is the seventh-largest.

The deal would align with the direction of the industry. The semiconductor market has been rapidly consolidating as chip makers look for ways to cope with slower growth recently. The Journal noted that NXP itself acquired another semiconductor firm, Freescale Semiconductor Ltd., last year.

Indeed, the number of chip deals this year has already exceeded $75 billion, according to The Journal.

For Qualcomm's part, the deal would substantially reshape the San Diego-based company, which has a market value of $93 billion. It would expand Qualcomm's chip business from dozens of major product lines to hundreds, and would instantly make the company the premier supplier of chips used in cars.

Related: Qualcomm eyes $30B acquisition of NXP Semiconductors

Not to mention that the acquisition could add 30 percent to Qualcomm's earnings before any cost savings, according to Sanford C. Bernstein analysts, the Journal wrote.

Will Strauss, president and principal analyst at Forward Concepts, said last month that NXP would be a good target to expand beyond the wireless handset market.

"It is obvious that Qualcomm is seeking to expand into markets beyond cellphones and there has been speculation about what acquisition would make sense for the San Diego-based company," Strauss wrote in a recent newsletter. "Eindhoven-based NXP would be an appropriate target because it has a very broad product portfolio which could broaden Qualcomm’s market coverage."

NXP is based in Eindhoven in the Netherlands, and specializes in chips for automotive systems, ID cards and transit cards. It was founded more than 60 years ago, and became the number one supplier of chips used in cars after it acquired Freescale.