With chipmaker Qualcomm Inc. looking to acquire rivals NXP Semiconductors NV, the move has been criticized by activist investors Elliott Management Corp. Elliot stated on Monday that the semiconductor manufacturer NXP is worth $135 per share on an intrinsic standalone basis, a value that is more than the $110 per share that Qualcomm offered to acquire the company.
Elliot management which holds about 6% stake in NXP told fellow shareholders of the company in a letter that he sent to them regarding Qualcomm’s acquisition offer. The offer was tabled back in October last year and has been acting as a ceiling for the valuation of NXP.
Back in August, Elliot disclosed its stake in the company, further indicating that he is pushing for a higher price per share than the $38 billion all-cash that Qualcomm offered them. Since that time, the stocks of NXP has been trading above that the offer price made by Qualcomm, though the spread has tightened in November.
Elliot back in August also added that the shares of NXP were significantly undervalued, with the fund manager adding on Monday that Qualcomm is trying to take advantage of NXP’s depressed stock price with their offer.
In his letter to shareholders, Elliot stated that “We believe NXP’s prospects are bright. Approximately half of NXP’s revenue is exposed to exciting growth engines of the semiconductor market – automotive and industrial.”
Elliot also stated that it has retained the services of UBS Investment Bank to perform a financial analysis of NXP, with the reports of the analysis to be presented to other shareholders very soon.
As Qualcomm is looking to purchase NXP, the company itself is an acquisition target for rivals Broadcom Ltd, who have already seen their $103 billion acquisition offer turned down last month. Broadcom is expected to come back with an improved offer very soon.
Broadcom have also indicated that they are willing to purchase Qualcomm regardless of whether the deal for NXP goes through or not.
The shares of NXP were up by nearly 1% at the premarket session, trading at $116.30. The shares of Qualcomm, on the other hand, was down, trading at $64.02.