Author Topic: NXPI -NXP Semiconductors N.V.  (Read 8276 times)

ValueMaven

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NXPI -NXP Semiconductors N.V.
« on: January 25, 2018, 06:30:31 PM »
Creating this as this is a very interesting merger arb deal in the tech space...

NXPI is in the process of being acquired by QCOM for $110 per share, QCOM itself is in the process of fighting off a take-over battle from AVGO. 

NXPI is a leader in the semiconductor space for industrials and autos.  The acquisition was a brilliant on QCOM’s case, but many, many shareholders are holding out for much more.   The $110 per share low-balls NXPI both on a standalone valuation perspective, regardless of any control premium being applied.  You have several well know activists really pushing QCOM for a much higher price.  QCOM was forced to extend the tenor offer several times already…and the deal was again extended today into April.

A few things can happen here, but I think if QCOM walks away the stock rallies to peer multiples plus…or you can have another acquiring firm.  I’ve attached some of the work Elliott Management has done on the name.   FYI I have a modest size position on at around $120




ValueMaven

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Re: NXPI -NXP Semiconductors N.V.
« Reply #1 on: January 26, 2018, 04:31:09 PM »
If QCOM wants NXPI they are going to have to make a higher bid...hardly anyone has tendered into the deal...

If the deal breaks the stock rallies...


zippy1

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Re: NXPI -NXP Semiconductors N.V.
« Reply #3 on: February 20, 2018, 05:30:43 AM »
https://finance.yahoo.com/news/qualcomm-raise-offer-buy-nxp-111552181.html
Quote
Qualcomm raises offer for NXP, Elliott backs new bid
Quote
U.S. chipmaker Qualcomm Inc raised its offer to buy NXP Semiconductors NV to $127.50 per share on Tuesday, and said it now has the backing of the shareholder group led by Elliott Management that opposed the previous proposal.

Qualcomm said it needs to buy a minimum 70 percent of NXP's outstanding shares in a tender offer, instead of the 80 percent required in the earlier agreement. The latest offer values NXP at $44 billion.

NXP's shares were up 6.5 percent at $126.15 in premarket trading. The stock has traded above the original offer price for nearly seven months as investors expected a revised offer.

The buyout of NXP will help Qualcomm, which provides chips to Android smartphone makers and Apple Inc, to expand in the fast-growing market for chips used in automobiles and reduce its dependence on a cooling smartphone market.

A deal will also bolster its defence against a hostile takeover attempt by Broadcom Ltd, which has said its $121 billion offer is contingent on either Qualcomm buying NXP at $110 per share or the deal being terminated.
Quote
Qualcomm said on Tuesday it had entered into agreements with nine NXP stockholders, who collectively own more than 28 percent of NXP, including top shareholder Soroban Capital Partners LP and second-largest Elliott.

Activist hedge fund Elliott, which had resisted Qualcomm's previous $110 per share offer saying it undervalued NXP, said it was pleased that NXP's value had been recognised in the revised transaction terms.

Qualcomm has also extended its tender offer for NXP until March 5, a day before its shareholder meeting when Broadcom's slate of directors is also up for vote.

Qualcomm had resisted increasing the offer price and last month said it would boost its buyback as an alternative to buying NXP.

"Our preference is to close NXP, but not at all costs," Qualcomm Chief Financial Officer George Davis said on a post-earnings conference call in January.

ValueMaven

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Re: NXPI -NXP Semiconductors N.V.
« Reply #4 on: February 20, 2018, 05:18:53 PM »
Yes, this was a very decent trade actually, with a nice IRR.  I am out.

'Give a man a fish, and you feed him for a day. Teach him how to arbitrage and you feed him forever.' -WEB 1989

Sincerely,
ValueMaven

zippy1

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Re: NXPI -NXP Semiconductors N.V.
« Reply #5 on: February 21, 2018, 05:08:36 AM »
Yes, this was a very decent trade actually, with a nice IRR.  I am out.

'Give a man a fish, and you feed him for a day. Teach him how to arbitrage and you feed him forever.' -WEB 1989

Sincerely,
ValueMaven

ValueMaven,

        Really need to thank you for bringing up this idea! I got in around 121 and am out also.

         I am very interested in your view on Qualcomm's itself now.

          Again, thanks a lot for this idea.

          best regards,

          Zippy

peterHK

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Re: NXPI -NXP Semiconductors N.V.
« Reply #6 on: April 25, 2018, 11:21:27 AM »
This is very good value now that the deal has fallen apart. I suspect M&A arb funds have sold out and now we have a company trading at 10x EV/EBITDA while peers trade at 13-14x. Also a lot of the digital names have traded down, but analog feeds into different markets and TXN's results confirmed that today, so I think the market has made a mistake selling off analog and digital names together.

By my math:

$2bn break fee
$2bn + in FCF this year
1x EBITDA of leverage = ~$4bn
Gets you to $8bn in cash they can tap, or 20% of the market cap.

If they buy back 20% of shares O/S, that takes EPS from ~$7.50 this year to $9. Slap a 14x multiple on that and you get a $126 stock. I expect Elliot will press for something to happen if they don't sell out first.

Long run growth drivers intact (increased tech content in everything), this should be able to do 4-6% topline and 10%+ EPS growth over the next decade.

ValueMaven

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Re: NXPI -NXP Semiconductors N.V.
« Reply #7 on: April 25, 2018, 04:48:27 PM »
Yes...wait till the deal breaks however.  I am with you on the analysis. 

I think it goes below $100...

I am actively watching this one! 

peterHK

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Re: NXPI -NXP Semiconductors N.V.
« Reply #8 on: April 26, 2018, 06:31:30 AM »
Yes...wait till the deal breaks however.  I am with you on the analysis. 

I think it goes below $100...

I am actively watching this one!

Might go below $100, might not. My sense is that a lot of arb funds have sold out and I don't believe you can predict short term movements. Like I said, I expect Q1 will be good, so that might cause a pop in the shares in which case you might wish you'd bought earlier.

ValueMaven

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Re: NXPI -NXP Semiconductors N.V.
« Reply #9 on: April 30, 2018, 04:31:27 PM »
Agree w/you actually.  I started loading up today on this one...really interesting situation!