Qualcomm (QCOM) 'Plan B' if NXPI Deal is Blocked is Buybacks - RBC
RBC Capital analyst Amit Daryanani weighed in on Qualcomm (NASDAQ: QCOM) after the company and NXP (NASDAQ: NXPI) have withdrawn and refiled with MOFCOM the notice of acquisition. According to MOFCOM, the combination could curb the competition within the industry, and Chinese regulators believe the remedies QCOM previously offered do not alleviate their concerns regarding distortion of fair competition.
Daryanani highlights that QCOM would pay NXPI termination compensation of $2B if the parties have not received all required regulatory approvals (by July 25th) .
As an alternative to the NXP deal, Qualcomm could do $20-$25 billion in buybacks, which would give it an EPS benefit of ~$1.50, equal to the accretion expected from NXP.
The firm maintained an Outperform rating and price target of $80 on QCOM.
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Shares of Qualcomm closed at $55.23 yesterday.