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Moody's changes outlook on Qualcomm to negative after higher bid for NXP

Moody's affirmed Qualcomm Inc.'s A1 senior unsecured rating and changed the ratings outlook to negative following the company's increased offer for NXP Semiconductors NV.

The rating agency expects the deal to result in a higher leverage which would lead to a longer period of elevated financial leverage given Qualcomm's ongoing license disputes with Apple Inc. and another large licensee.

The combination will meaningfully enhance Qualcomm's end market and customer diversification and accelerate Qualcomm's move into sectors adjacent to its core mobile market.

Moody's believes that some portion of the $6 billion incremental purchase price could be funded with additional debt. Thus, Qualcomm's pro forma gross adjusted debt to earnings before interest, taxes, depreciation, and amortization could be well over 3x at closing.