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UPDATE: Qualcomm raises bid for NXP; Broadcom evaluates options

Qualcomm Inc. raised its offer for NXP Semiconductors NV to $127.50 per share from $110.0 per share initially agreed in October 2016, in a $43.23 billion bid that comes as it seeks to fend off a hostile takeover bid by Broadcom Ltd.

Qualcomm said the increased price, which it intends to fund with cash and new debt, reflected factors including NXP's 2017 results.

It came after Broadcom raised its bid for Qualcomm to about $121 billion earlier in February, saying that its offer depended on Qualcomm's accquiring NXP at $110 per share or dropping the deal. Qualcomm had earlier rejected Broadcom's unsolicited proposal.

The amended agreement, approved by the Qualcomm and NXP boards, also lowers the minimum tender condition from 80% of NXP's outstanding shares to 70%. In addition, Qualcomm River Holdings BV's tender offer for NXP shares will be extended to the end of March 5 ET.

Soroban Capital Partners LP and Elliott Advisors (U.K.) Ltd. are among the nine NXP shareholders, who collectively own more than 28% of NXP shares, that agreed to tender their shares at $127.50 per share.

Qualcomm expects annualized cost synergies of at least $500 million from insights gathered during the integration planning process.

"We remain highly confident in our fiscal 2019 non-GAAP EPS target of $6.75-$7.50, which includes $1.50 per share accretion from the acquisition of NXP," said Qualcomm CEO Steve Mollenkopf. "With only one regulatory approval remaining, we are working hard to complete this transaction expeditiously."

The transaction remains contingent on clearance from the Ministry of Commerce in China, which Qualcomm is optimistic it will receive in the near term.

NXP has 339,029,827 outstanding shares.

In a Feb. 20 statement, Broadcom said the revised price for NXP transferred $4.10 per Qualcomm share from Qualcomm stockholders to NXP stockholders, representing approximately $6.2 billion of value. Broadcom said the revised price for NXP is beyond what Qualcomm has characterized as a "full and fair" price.

The company believes that the price increase shows the Qualcomm board's disregard for its fiduciary duty to maximize value for Qualcomm stockholders.

Broadcom said it is evaluating its options.