Qualcomm drops US$44 billion NXP bid after failing to secure Chinese antitrust regulator’s nod

US chip maker Qualcomm has walked away from its US$44 billion bid for NXP Semiconductors after failing to secure the approval of China’s antitrust regulators for the biggest takeover in the chip industry, becoming the highest-profile victim since a trade war broke out between the two economies.

The merger agreement expired at noon Hong Kong time on Thursday, nearly 21 months after Qualcomm first offered to buy the Dutch chip maker. Beijing’s silence on the acquisition led the US company to believe that approval - critical for the deal to be effective in the world’s largest consumer market - would not be given.

“We intend to terminate our purchase agreement to acquire NXP when the agreement expires at the end of the day today, pending any new material developments,” Qualcomm’s chief executive officer Steve Mollenkopf said in a statement on Wednesday afternoon in New York.

He said the company would move ahead with a US$30 billion stock buy-back plan rather than continue with its pursuit of NXP. Qualcomm still must pay NXP a US$2 billion break-up fee.

“If events occur that cause us to not terminate the transaction, we will continue to pursue the acquisition of all of the issued and outstanding shares of NXP,” Mollenkopf said.

Qualcomm seems to be “leaving the door open for China in a way that stops short of drawing a firm line in the sand by requiring outright ‘approval’ in order to avoid termination of the agreement,” said David Connor, an event-driven strategist at brokerage firm Seaport Global Securities. The deal allows extension “by mutual agreement of NXP and Qualcomm, if they so choose”.

China’s State Administration for Market Regulation remained silent about the acquisition in the run-up to the deadline. The administration could not be immediately reached for comment.