NXP Charts Post-Qualcomm Path -- WSJ
11 Settembre 2018 - 9:02AM
Dow Jones News
Dutch chip firm keeps focus on auto sector, sets cash for
investors after a collapsed deal
By Stu Woo
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (September 11, 2018).
NXP Semiconductors NV, frozen for almost two years by Qualcomm
Inc.'s failed bid to buy it, now must convince shareholders to
support the Dutch chip maker's new go-it-alone strategy, which
includes a new quarterly dividend.
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 Mr. Clemmer 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
Nasdaq-listed 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, announcing a regular quarterly cash dividend. The
initial dividend for the fourth quarter will be 25 cents per
ordinary share.
Mr. Clemmer 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 provide 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."
He 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 11, 2018 02:47 ET (06:47 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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