Betting against Hock Tan is a risky business. At least, that’s what people who have dealt with the Broadcom chief executive keep telling DD.
But US chipmaker Qualcomm is doing its best to fend off a $146bn hostile bid by the deal hungry mastermind behind its Singapore-based rival. Its latest defence tactic, however, was unusual.
On Tuesday, Qualcomm agreed to lift a takeover bid for Dutch-based NXP Semiconductors by roughly $7bn, hoping that a new $44bn offer would be enough to close a deal that was agreed back in October 2016. Our full coverage is here.
Why was the move unusual? Because NXP was subject to significant activist interest led by US hedge fund Elliott Management who has been arguing that the Dutch group, which Qualcomm coveted for its prowess in chips for the automotive and security sectors, was worth more.
Typically, companies don’t like paying up big to see off pesky activists. But paying up is what Qualcomm is doing after frantic negotiations over the US three-day weekend, when its advisers worked around the clock to convince nine NXP investors to back the new offer valuing the Dutch company at $127.50 per share. Read the amended terms here.
(Of note in this situation: UBS, which was left off the deal, agreed to work with Elliott on its agitations, in a very rare move for an investment bank.)
In its overtures to Qualcomm in recent months, Broadcom made it clear it wasn’t going to pay more than the $110 a share that Qualcomm had agreed to pay NXP shareholders back in 2016. Now Broadcom and Tan need to figure out whether it’s worth it to go the extra mile and pay more cash for NXP.
Broadcom can still win the final battle. It is seeking to overthrow at least half of Qualcomm’s board on March 6 and use those seats to push through a deal.
One thing going in its favour? Influential proxy advisory firms Glass Lewis and Institutional Shareholder Services seem to both be quite supportive of its advances and have advised Qualcomm investors to push for a deal.
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Albertsons beefs up for Amazon’s next big push
It is yet another combination spurred by Amazon, the ecommerce behemoth whose tentacles stretch far beyond the retail industry it first came to dominate. Albertsons, the Cerberus-backed US grocer, agreed to purchase drugstore chain Rite Aid on Tuesday in a deal that will create a retailer with $83bn in annual sales.
The combined group, worth more than $20bn when including debt, will seek to fend off Amazon and other ecommerce threats. Analysts with Moody’s said the new company — which has yet to be named — will have the scale “necessary to compete”.
The primarily-stock deal also gives Albertsons a path towards a public listing without having to attempt an initial public offering, which might be desirable given the recent volatility. Albertsons has struggled to get an IPO off the ground for more than two years, with paperwork for a flotation first filed with the SEC in July 2015.
Bankers in New York said they expected this deal to be among many in the consumer sector this year, although one cautioned that there weren’t many other targets in the grocery business of comparable size to Albertsons beyond Kroger. You’ll remember one of the big competitors in the space, Whole Foods, was scooped up by Amazon last year for a cool $13.7bn.
Lex offers one reason shares in Rite Aid barely responded:
Walmart reported a disappointing festive season on the same day, so perhaps the idea of even a huge food and drug chain does not seem so compelling.
And read this at Bloomberg Gadfly on why there weren’t many good options left for shoring up defences against Amazon.
Financial data and market software in vogue
Equity markets may be overheated but the companies providing the trading technology and data that power them remain red hot. The latest example came as Swiss banking software group Temenos had to come clean about its talks to acquire Fidessa, the UK provider of trading tools.
Last month, Blackstone unveiled a $17.3bn move for the terminals and data businesses of Thomson Reuters and a few months earlier Ion Investment Group, backed by Carlyle Group, agreed to buy OpenLink and a controlling stake in Dealogic.
The question for Temenos is whether a private equity bidder, such as Advent, steps in to disrupt its bid after the Swiss company was forced to disclose the £1.4bn takeover talks. Read up on the situation here via the FT’s Philip Stafford.
Law firm Orrick has hired Paul Doris as a partner from Watson Farley & Williams. Doris will focus on M&A and private equity deals, particularly in the energy and infrastructure sectors.
DA Davidson has partnered with MCF Corporate Finance, the European independent M&A advisory group. The agreement between the two will seek to foster more transatlantic deals to clients of both firms.
Michael Peterson has joined law firm Reed Smith as a partner in its global corporate group in Philadelphia. Peterson comes from Morgan Lewis where he focused on private equity and corporate finance.
Skadden Arps dragged into Russia probe The US law firm’s work in the Ukraine for Trump associate Paul Manafort is in the crosshairs as a former associate at the firm has pleaded guilty for lying to special counsel Robert Mueller. (NYT, NYT)
Inside Philip Green’s dwindling fashion empire Is the UK retail tycoon Philip Green ready to throw in the towel? ( FT)
Hotshot media sites lose momentum Three years ago the likes of Vox, Vice and BuzzFeed could raise money with ease. Now their fortunes have sagged alongside the slump in digital advertising. ( FT)
The curious case of Philadelphia Energy Solutions The private equity model of leverage and dividend recaps is under scrutiny in the blow-up of a Philadelphia energy company. (Reuters)
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Javier Espinoza in London — @JavierespFT
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