Qualcomm (QCOM) May Have to Raise NXP Semiconductors (NXPI) Bid to $125/Share to Close Deal - Source

Paul Singer's Elliott Associates officially disclosed its position in NXP Semiconductors (NASDAQ: NXPI) Friday with the filing of its 13D with the SEC. Elliott and related funds now control approximately 6 percent of the outstanding shares and disclosed an ongoing dialog with management. Elliott's activity in NXP is not new, having been discussed various times in the media, but the filing and the activist fund's continued involvement in the situation propelled shares above the $110 Qualcomm (NASDAQ: QCOM) deal price on continued speculation of a higher bid (last at $112.37).

Sources believe Qualcomm will have to go to $125 per share to get the deal approved by shareholders. This is based the 37 percent jump in the Philadelphia Semiconductor Index, or SOX, since the NXP deal talk emerged. Based on the peer group move and a $82.24 per share undisturbed price for NXP, shares would be trading at $112 per share without a deal. Add in a deal premium and ~$125 per share is seen as the price needed to win shareholder approval.

Some see even greater upside. Susquehanna analyst Christopher Rolland recently noted that some investors believe that Qualcomm could pay up to $130 per share for NXP.

Recent tender offer stats tell the story. In its recently extended tender offer, Qualcomm said just 7.6 percent of the outstanding NXP common shares are tendered at this point, this is down from the 12.5 percent tendered as of June 27. Qualcomm needs 80 percent to get the deal approved.

Timing of a potential raised bid from Qualcomm remains unknown as the deal is still waiting for regulatory approval in China and Europe. In a recent interview with CNBC's David Faber, Qualcomm CEO Steve Mollenkopf said he is confident they can close the deal by year-end but wouldn't comment on a higher price for NXP.

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