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What Does Elliott Want from NXP-Qualcomm

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Elliott owns 6% of NXP Semi

Activist investor Elliott Management is targeting NXP Semiconductors (NXPI) in a fashion that could add a twist to its pending merger with Qualcomm (QCOM). The deal awaits regulatory approval in Europe (EFA).

To close the deal, at least 70% of NXPI shareholders must agree to the deal through the tendering of their shares for the transaction. But one of NXPI’s influential shareholders, Elliott, is suggesting that it’s not satisfied with the Qualcomm’s buyout offer. Qualcomm proposed to acquire NXPI for $38 billion, or $110 per share, in cash. Elliott, a New York hedge fund, owns 6% equity stake in NXPI.

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Significantly undervalued stock

In a securities filing cited by the Wall Street Journal, Elliott described NXPI stock as “significantly undervalued,” indicating that it would prefer to have Qualcomm boost its offer for the company.

Elliott further said that it planned to engage the management and board of NXPI to discuss operations and strategic transactions. Some analysts have pointed out that some NXPI investors think Qualcomm’s offer should be $130 per share.

A $35-billion revenue opportunity

Qualcomm is seeking to acquire NXP Semiconductors as part of its positioning to benefit from the growing demand for automotive chips. Expanding into the automotive industry is also Qualcomm’s attempt to diversify its revenue streams. The company depends on the sales of wireless chips for smartphones for the bulk of its revenues.

Amid the push in the automotive chip market, Qualcomm appears to be trying to keep pace with rivals Intel (INTC) and Nvidia (NVDA). According to Grand View Research, the automotive chip industry will be worth more than $35 billion by 2022.

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