Trump Talks of China Rethinking $44 Billion Qualcomm (QCOM, $58.26)-NXP Deal - But Will the Two Firms Be Ready For It?

In July, U.S. chipmaker Qualcomm had to drop its plan of buying Dutch multinational rival NXP, apparently due to heated trade tensions between the U.S. and China. And now, U.S. President Donald Trump claims that Chinese President Xi Jinping might approve the acquisition, following Saturday's trade talks between the two leaders.

Ever since its announcement in October 2016, the $44 billion proposed merger between Qualcomm and NXP got approvals from eight jurisdictions, but was awaiting China's decision. In  late July, Qualcomm thought that it was best to walk away from the deal since Chinese regulators had not responded even at the eleventh hour before the deadline expired. But following late last week’s talks with Xi, Trump said about Xi and the deal, "If that deal came back to him, he would most likely approve it quickly". China, however, did not mention the Qualcomm-NXP deal in the official statement it released after the meeting with Trump.

Even if there are hopes that China could reconsider the acquisition, question is - will NXP or Qualcomm or both be willing to pursue the merger again? Qualcomm has already gone ahead with its $30 billion of stock buyback plan and has paid NXP $2 billion in break up fee – expenses Qualcomm promised to bear should the merger fall through.