NXP Semiconductors NV (NASDAQ: NXPI) is having a rough start to the trading session this morning, and for good reason. Investors have been in limbo for some time as the company awaits word from China with regard to the Qualcomm (QCOM) acquisition agreement. As investors wait on China, uncertainties contue to arise. Unfortunately, this is leading to declines in the value of the stock. Today, we’ll talk about:
- The potential acquisition of NXPI by QCOM;
- what we’re seeing from the stock; and
- what we’ll be watching for ahead.
NXPI Falls As Investors Await Nod From China
As mentioned above, NXP Semiconductors is having a rough start to the trading session this morning as investors continue to wait on China. Essentially, Qualcomm has agreed to buy the company and entered into a definitive agreement to do so. However, the transaction needs approval from China’s regulators.
At the end of the day, the deadline for the offer expires in hours, but China has yet to give approval. This raises concerns that the deal could be scrapped as tensions surrounding trade may cause China to reject the transaction.
NXPI first announced the transaction in October of 2016. If all goes well, the company could be sold for $44 billion under the acquisition agreement. However, if China doesn’t approve the acquisition, and soon, QCOM will be on the hook for a $2 billion breakup fee as NXPI walks away from the deal.
Interestingly, the deal was subject to approval from nine global regulators. Eight of the regulators that needed to provide approval have already done so. However, China is dragging its feet. Nonetheless, if the deal doesn’t get approval by 11:59 pm tonight, it will be scrapped.
What We’re Seeing From The Stock
One of the first things that investors learn when they start to work in the market is that the news leads to moves. In the case of NXPI, the fact is that the move is actually being caused by no news, and until news is released, we can expect to see the stock in the red. Of course, our partners at Trade Ideas were the first to alert us to the declines. Currently (9:24), NXPI is trading at $97.17 per share after a loss of $3.49 per share or 3.47% thus far today.
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What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to keep a close eye on NXPI. In particular, we’re interested in following the story surrounding the company’s potential acquisition by QCOM and China’s response, should it take place before the contracted deadline. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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