(Bloomberg) -- NXP Semiconductors NV hired boutique investment bank Qatalyst Partners amid acquisition interest from Qualcomm Inc., people with knowledge of the matter said.
Qatalyst will begin a formal sales process to find a buyer for NXP, said the people, asking not to be identified because the information is private. In addition to Qualcomm, Avago Technologies Ltd., Intel Corp. and Samsung Electronics Co. are the most likely to be interested, one of the people said. NXP may also hire a co-adviser, another person said.
While NXP has grown quickly via its purchase of Freescale Semiconductor at the end of last year, it's still relatively small compared with companies such as Qualcomm, Intel and the more rapidly expanding Broadcom Ltd. NXP is projected to have more than $9 billion in revenue this year.
NXP Chief Executive Officer Rich Clemmer and his board, who successfully brought the company back to the public markets in 2010, may be tempted by an offer to become part of a bigger company as industrywide costs of production rise and customer lists shrink.
Representatives of NXP, Qatalyst, Broadcom and Intel declined to comment. A representative for Samsung didn't respond to requests for comment.
Qualcomm's Options
NXP is one of several companies that San Diego-based Qualcomm, the largest maker of chips for mobile phones, has been studying as it determines if and how to put its offshore cash to use, people familiar with the matter said Friday. Qualcomm is also considering a handful of other large acquisitions, both domestic and international targets, the people said.
Talks between NXP and Qualcomm are still preliminary, people with knowledge of the matter said.
Qualcomm is under pressure from shareholders who want the company to put its industry-leading $30 billion of cash to work, said a person familiar with the considerations. Management hasn't yet decided whether to stick with its policy of smaller acquisitions to plug gaps in technology or to pursue a large deal that would transform the company, the person said.
Combining with NXP would create a company with technology that would place it at the center of the growing push to bring more electronics and automation to cars, according to Vijay Rakesh, an analyst at Mizuho Securities. He upgraded his rating on Qualcomm to buy and is predicting the stock will rise to $75. The shares closed Friday at $68.50.
“We believe a deal here makes significant strategic and financial sense,” he wrote. “The move to automotive transforms the narrative on Qualcomm from handsets to automotive, a secular growth road map with connectivity, mobility, and services platforms.”
--With assistance from Ian King To contact the reporter on this story: Alex Sherman in New York at asherman6@bloomberg.net. To contact the editors responsible for this story: Elizabeth Fournier at efournier5@bloomberg.net, Elizabeth Wollman, Andrew Pollack
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