NXP Charts Post-Qualcomm Future
11 Settembre 2018 - 12:12AM
Dow Jones News
By Stu Woo
NXP Semiconductors NV, frozen for almost two years by Qualcomm
Inc.'s failed attempt to buy it, now must convince shareholders of
the Dutch chip maker's new go-it-alone strategy.
NXP's investor day Tuesday in New York will mark the first time
the company has seriously engaged investors and analysts since
Qualcomm announced the proposed merger in October 2016. Chief
Executive Rick Clemmer said Monday that he doesn't plan to
significantly alter his company's predeal strategy, which focused
on leading the market for chips for automobiles.
"We hadn't gone through the strategy a lot in the 21-month
period of time" that the company was waiting for approval of the
deal, Mr. Clemmer said in an interview. Qualcomm had asked NXP to
keep quiet during the transaction process, so he didn't hold
conference calls or meet with investors or analysts during that
time.
"As soon as I realized there was a chance the deal would break,
I said we'd dust off our strategy, not reformulate strategy," he
said. The $44 billion deal between Qualcomm and NXP fell apart
after failing to win approval from Chinese regulators.
Mr. Clemmer said he planned to tell investors Tuesday that NXP
is a functioning company that doesn't need major changes. He said
he would focus on explaining some recent moves: removing a layer of
management, combining two divisions and entering the
electric-vehicle market with a new product.
Helping the company to win over investors is the $2 billion
breakup fee from Qualcomm. Mr. Clemmer said he now plans to reward
investors, giving cash back to shareholders.
He said he also hoped to persuade investors that he and his
management team are engaged. NXP has already committed $200
million, taken from the breakup fee, to offer incentives to entice
the company's management team to stay for three years.
Mr. Clemmer said he met Qualcomm CEO Steve Mollenkopf at a March
2016 conference to pitch selling NXP's digital-networking division
to him. He said Mr. Mollenkopf countered by asking for the whole
company.
"I said, 'Wait, that's not the purpose of our discussion,' " Mr.
Clemmer said.
The two sides announced the deal in October 2016 for $39
billion; Qualcomm later raised its bid to $44 billion. Mr. Clemmer
said he and Mr. Mollenkopf held weekly calls, and that the two and
their wives spent a weekend this year at Mr. Clemmer's house in
Cabo San Lucas, Mexico, to bond during nonwork hours.
An intensifying trade spat between the U.S. and China weighed on
the deal's prospects. On May 14, NXP stock jumped 12% after
President Trump said he was working with Chinese President Xi
Jinping to extend a reprieve to ZTE Corp., the Chinese
telecommunications company that Washington had punished for
breaking terms of a sanctions-busting settlement. A month later,
Mr. Clemmer joined a Dutch delegation at the White House and left
with the impression that U.S.-China trade tensions were easing and
that the Qualcomm-NXP deal would no longer be a negotiating
chip.
Still, in May, he asked his strategy team to create a Plan B in
case the deal fell through. "We thought it was wasted effort," Mr.
Clemmer said, "but we thought it was too critical to not have a
backup plan in place because of the trade tension."
Mr. Clemmer didn't give up on the deal until the midnight
deadline passed in July.
A North Texas native who spent his teenage summers managing his
father's lumberyard, Mr. Clemmer had planned on taking a vacation
in the south of France this summer and then starting a tech startup
with friends. He had sold $400 million of NXP shares in 2017
because, he said, his tax rate was changing from 30% to 52%.
Instead, he said he has spent the past weeks meeting with
skeptical analysts and investors, including Bernstein Research's
Stacy Rasgon. "I didn't feel like they were just spinning in their
chairs for two years," Mr. Rasgon said. Still, he said Mr.
Clemmer's challenges will be running NXP after it lost top managers
during the merger process, and providing a clear corporate
strategy.
Write to Stu Woo at Stu.Woo@wsj.com
(END) Dow Jones Newswires
September 10, 2018 17:57 ET (21:57 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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