[ad_1]
Do not expect a resurgence of technology mergers and acquisitions until Donald Trump's growing trade war with China cools.
The acquisition of NXP Semiconductors by NV Qualcomm Inc. to 44,000 million US dollars – a two-year agreement that was taken in the tariff dispute – was canceled. The transaction was given the green light by regulators around the world, with the exception of China.
It has even been approved by Chinese agencies responsible for reviewing mergers, according to people close to the case, but the government has never given final clearance.
Technology companies, especially semiconductor manufacturers and other hardware companies They were waiting for the end of the agreement between Qualcomm and NXP before deciding to undertake their own acquisitions, according to experts from # 39; industry.
As the world's largest chip and smartphone market, China is perhaps the largest regulator of technology hardware in the world.
Leaders do not want their transactions to become the next pawn of the US trade war with China, which has led them to face precautionary situations involving the approval of Chinese regulators. "This certainly raises concerns about future mergers and acquisitions," said Michael Walkley, an analyst at Cannacord Genuity Inc. "There is more and more uncertainty about the duration of the problems with China and the continuation of blockages ".
Meanwhile, agreements in the technology and infrastructure sector will be the subject of further scrutiny by the US regulator, which assesses transactions at the airport. Foreign, according to Bloomberg Intelligence.
The powers of the US Foreign Investment Committee (CFIUS) will be expanded by a bill that Congress is expected to approve in August.
Consolidated Purchases
The law will also increase the reasons for blocking bids, including considerations such as cybersecurity, and give the president greater powers to suspend acquisitions. Trump has already banned two acquisitions of semiconductor companies by foreign buyers.
Uncertainty hinders the negotiation of agreements, and the Trump administration's interactions with China have sometimes been difficult to interpret. In a surprise Twitter message in May, Trump backed down on sanctions against Chinese telecommunications company ZTE Corp. which had been imposed by the US Department of Commerce.
It was not clear if the department was involved in Trump's decision on ZTE. Lifting of the ZTE sales ban was a key demand from China in the context of broader negotiations to avoid a trade war. The conflict escalated this month when Trump said he was ready to impose tariffs on all Chinese imports.
For potential buyers, unconsumed acquisitions can be expensive. In the case of Qualcomm, it will have to pay the Dutch company NXP compensation of US $ 2,000 million for breaking the agreement. Without the acquisition, Qualcomm, based in San Diego, now plans to spend $ 30 billion of its cash surrender to appease investors.
Qualcomm CEO Steve Mollenkopf said that he did not expect tensions between the US and China to change significantly in the near future, which has prompted his company to cancel the agreement.
Mollenkopf noted that she continued to support the NXP transaction and the logic behind it, although it was unclear whether the result indicated a difference as to whether Qualcomm could search for Other agreements.
Source link
