China set to Approve Qualcomm’s Acquisition of NXP Semiconductors

Qualcomm Inc. (NASDAQ: QCOM) is expected to meet with China’s antitrust regulators in Beijing to finalize its $44 billion acquisition of NXP Semiconductors (NASDAQ: NXPI), according to Reuters, citing three sources familiar with the matter.

According to the sources, a Qualcomm team and officials from the State Administration for Market Regulation (SAMR) met in Beijing on Friday and had “productive” talks.

The sources said the approval would depend on the progression of bilateral talks amid rising trade tensions between the U.S. and China. The deal has received eight out of the nine required global regulators approvals, with China being the only one that has not responded.

Qualcomm is likely to meet regulators before U.S. Commerce Secretary Wilbur Ross arrives in China on Saturday, the sources told Reuters.

Qualcomm is now preparing a new submission to SAMR to provide final guarantees and assurances, said the sources.

The approval of Qualcomm’s takeover attempt comes most likely after the Trump administration reached a deal on Friday that puts ZTE Corp back into business after paying a $1.3 billion fine and management changes.

ZTE was banned back in April from buying U.S. technology components for seven years after violating U.S. sanctions against Iran and North Korea.

The trade war tensions have escalated between the U.S. and China, which has led to many mergers and acquisitions being blocked by regulators.

In early January, the Committee on Foreign Investment in the United States (CFIUS) blocked a deal between MoneyGram International Inc. (NASDAQ: MGI) and Ant Financial Services Group. CFIUS did not provide information why the deal was blocked.

Then in February, U.S. regulators blocked a bid for the sale of the Chicago Stock Exchange led by a group of China-based investors. Regulators blocked the potential sale due to the ambiguity could threaten the exchange.

More recently, U.S. President Donald Trump blocked Broadcom Ltd.’s (NASDAQ: AVGO) takeover attempt for Qualcomm over concerns of national security issues back on March. Regulators were threatened that a merger between the two could threaten the U.S.’s race to 5G technology.

But recent events such as China’s approval of Bain Capital’s acquisition of Toshiba Corp’s chip unit for $18 billion or U.S. Treasury Secretary Steven Mnuchin saying that the trade war would be put on hold until a deal is resolved between the two nations.

Despite the moves, U.S. officials still threaten to implement tariffs if meaningful progression is not made, leaving trade tensions still lingering.

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