Jul 27, 2018

Qualcomm's $2 billion bet on Trump goes bad

llustration: Rebecca Zisser/Axios

Qualcomm yesterday disclosed that it will pay $2 billion to Dutch chipmaker NXP, after pulling the plug on a $44 billion takeover attempt.

The big picture: Qualcomm, which declined comment, seems to have made a $2 billion bet in April that trade tensions between the U.S. and China would settle down by mid-July. Perhaps it thought it really understood President Trump, since he had just saved it from a hostile takeover by Broadcom. It was wrong.

Here's what happened:

  • Qualcomm originally agreed to buy NXP in October 2016.
  • That agreement included a $2 billion reverse termination fee, but there were some exceptions to when it would be applicable. The big one was if Qualcomm couldn't get enough NXP stockholders to tender their shares (the deal had to be done via a tender, not just a vote, because of Dutch securities laws).
  • Qualcomm never hit the tender threshold.
  • This past April the two companies amended the agreement, as U.S.-China trade tensions were getting in the way of gaining Chinese regulatory approval. The headline change was around three-month extension to get the approval, but the fine print included a removal of language that tied the $2 billion fee to enough shares being tendered.
  • That April agreement could have just included a change to the expiration date, but instead it did much more. It is unclear if NXP, which declined comment, requested the additional changes, or if Qualcomm ever objected.
  • Had the language not been changed, NXP still could have argued it was owed the money because of China's refusal to approve. But Qualcomm would have had a strong defense that the failure to get enough tendered shares was a more fundamental reason for the breakup.

Go deeper

Judge rules against Trump policy limiting public comment on energy leasing

Photo: Joe Amon/The Denver Post via Getty Images

A federal judge on Thursday overturned a 2018 Trump administration directive that sought to speed up energy leases on public land by limiting the amount of time the public could comment.

Why it matters: U.S. Chief Magistrate Judge Ronald Bush's decision voids almost a million acres of leases in the West, according to The Washington Post. It's a victory for environmentalists, who tried to block the change as part of an effort to protect the habitat of the at-risk greater sage grouse.

  • The ruling invalidated five oil and gas leases in Nevada, Utah, and Wyoming, and affected 104,688 square miles of greater sage-grouse habitat, per The Associated Press.
  • Leases in greater sage-grouse habitat will return to allowing 30 days of public comment and administrative protest.

The big picture: From Axios' Amy Harder, this is the latest in a long and convoluted list of regulatory rollbacks the Trump administration is pursuing on environmental rules that courts are, more often than not, rebutting. With Congress gridlocked on these matters, expect the courts to be the default way Trump's agenda faces checks (unless, of course, a Democrat wins the White House this November).

Your best defense against coronavirus

Photo: Adrian Greeman/Construction Photography/Avalon/Getty Images

Washing your hands is the best way to protect against the novel coronavirus, according to doctors and health officials, as the virus continues to spread around the globe.

Why it matters: Frequent hand washing can stop germs from spreading in a community, a known preventative for COVID-19 and influenza.

Major League Soccer embarks on its 25th season

Illustration: Aïda Amer/Axios

As Major League Soccer begins its 25th season, the league is financially stable and surging in popularity, and its 26 teams have gorgeous facilities and rapidly increasing valuations.

  • It also continues to expand, with David Beckham's Inter Miami and Nashville SC set to debut this season as the 25th and 26th teams. Plans are in place to reach 30 franchises by 2022 — triple the number from 2004.
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