Qualcomm deals blow to Broadcom's bid with sweetened NXP deal

(Reuters) – U.S. semiconductor company Qualcomm Inc (QCOM.O) on Tuesday unveiled a sweetened $44 billion agreement to acquire NXP Semiconductors NV (NXPI.O), its most defiant move in its defense against a hostile $121 billion bid from Broadcom Ltd (AVGO.O).

The new deal puts pressure on Broadcom to decide if it will stick with a stipulation in its bid that Qualcomm does not raise its offer for NXP. It could strengthen Qualcomm’s defenses because it allows its shareholders to better assess the standalone value of Qualcomm as an alternative to a deal with Broadcom.

Qualcomm shares dropped 2.4 percent to $63.23, significantly below Broadcom’s latest $82 per share cash-and-stock offer unveiled on Feb. 5, as investors saw the new NXP deal as increasing the chances of Qualcomm repelling Broadcom.

Broadcom said on Tuesday it was evaluating its options in response to Qualcomm’s move and noted that the revised price for NXP was well beyond what Qualcomm has repeatedly characterized as “full and fair.” It called the new deal a transfer of value from Qualcomm shareholders to NXP shareholders.

In an interview with Reuters, Qualcomm’s presiding board director Tom Horton argued that the revised deal with NXP represented value of Qualcomm shareholders irrespective of the outcome of the takeover battle with Broadcom.

“It makes Qualcomm stronger and more profitable and diversified if there is no deal with Broadcom, and if we do decide to pursue a sale the same is true, more value would accrue to the Qualcomm shareholders,” Horton said.

Qualcomm raised its offer for NXP from $110 to $127.50 per share in cash. In exchange, it received binding agreements from nine NXP stockholders that collectively own more than 28 percent of NXP’s outstanding shares to support the deal. These include hedge funds Elliott Advisors (UK) Ltd and Soroban Capital Partners LP, which had spearheaded opposition to the NXP deal.

NXP’s shares rose 6.1 percent to $125.73. The stock had traded above the original offer price for nearly seven months, reflecting expectations among investors that Qualcomm’s offer would be raised.

NXP shareholders have to tender their shares in an offer that is currently set to expire on March 5, though Qualcomm has repeatedly pushed back this deadline as it awaits clearance from China’s MOFCOM, the only regulator globally needed to approved the deal that has yet to do so. The Chinese New Year holiday this month has delayed this review.

Under the new terms agreed with NXP’s board, the deal with Qualcomm is contingent on 70 percent of NXP’s shares being tendered, instead of the 80 percent threshold required in the earlier agreement signed in October 2016. Once this threshold is reached, Qualcomm can take over the entire company through a “second-step” transaction mechanism.

The new NXP deal came less than a week after Broadcom and Qualcomm executives met face-to-face for the first time to discuss the differences between the two sides. Qualcomm called the meeting constructive but reiterated it had several concerns over price and regulatory risk.

BOARD CHALLENGE

The acquisition of NXP will help Qualcomm to expand in the fast-growing market for chips used in automobiles and reduce its dependence on the competitive smartphone market.

The takeover battle between Qualcomm and Broadcom is at the heart of a race to consolidate the wireless technology equipment sector, as smartphone makers such as Apple Inc (AAPL.O) and Samsung Electronics Co Ltd (005930.KS) use their market dominance to negotiate lower chip prices.

Singapore-based Broadcom is mainly a manufacturer whose connectivity chips are used in products ranging from mobile phones to servers. San Diego-based Qualcomm primarily outsources the manufacturing of its chips which are used for the delivery of broadband and data, a business that would significantly benefit from the rollout of 5G wireless technology.

To put pressure on Qualcomm, Broadcom has put forward six nominees up for election at Qualcomm’s March 6 shareholder meeting to replace the majority of the company’s eleven-member board of directors.

Proxy advisory firm Glass Lewis on Tuesday recommended Qualcomm shareholders vote for all six director nominees Broadcom has put forward.

Last week, Institutional Shareholder Services Inc (ISS) had recommended for the election of four Broadcom nominees. While this recommendation would fall short of Broadcom’s nominees winning a majority on Qualcomm’s board, ISS said such a vote by Qualcomm shareholders would offer a reasonable path to a negotiated deal that would deliver value.

“ISS and Glass Lewis only influence a minority of our shareholders. They belie the fact that the Qualcomm board is doing everything it can in the furtherance of the interests of its shareholders. The ISS and Glass Lewis reports are also dated because they came out before certainty was secured on the NXP deal,” Horton said.

Additional reporting by Sonam Rai and Supantha Mukherjee in Bangalore; Editing by Patrick Graham and Meredith Mazzilli

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UberEATS Driver Fatally Shoots Customer in Atlanta, Police Say

Atlanta police say a driver for UberEATS, the ride-hailing company’s food delivery service, shot and killed a customer in the city’s posh Buckhead neighborhood late Saturday night.

The victim was identified by a local NBC affiliate as 30-year-old Ryan Thornton, a recent Morehouse College graduate. According to NBC’s report, Thornton and the UberEATS driver exchanged words after the delivery was made. The driver then allegedly shot Thornton several times and fled in a white Volkswagen vehicle.

Thornton was taken to a local hospital, where he later died from his wounds. The alleged shooter was still on the run from police early this morning.

An Uber spokesperson said the company was “shocked and saddened” by the event, and are cooperating with Atlanta police in the investigation.

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One Buckhead resident told the television station that he would be more cautious about using Uber services after the shooting. Uber drivers have been implicated in violence in the past, and the company’s approach to screening its drivers has been criticized for some of its legal and public relations problems.

The most damaging case was likely that of an Indian passenger who was raped by an Uber driver in 2014. In court documents, the passenger alleged that Uber executives wrongfully obtained her medical records with apparent plans to discredit her. The driver was sentenced to life in prison, and Uber settled the civil suit brought by the victim late last year.

Last November, two women filed a class-action lawsuit against the company in the U.S., alleging that its failure to screen drivers has led to thousands of incidents of sexual harassment and even rape of female passengers. In one example, an Uber driver was arrested for the rape of a passenger last December, also in Atlanta. Just days later, an Uber driver in Lebanon confessed to murdering a British Embassy staffer there.

Under former CEO Travis Kalanick, Uber fought hard against certain driver-screening rules. In one case, Uber shut down its operations in Austin, Texas in 2016 after spending millions of dollars to defeat a background-check rule there, and failing. It returned to the city after state legislators overturned the local ordinance. Safety concerns were also among the reasons London has barred Uber from operating there.

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Beware of Pranksters Crashing Apple iPhones Using Twitter

If you’re an Apple iPhone user who also enjoys Twitter, listen up.

Pranksters on the social media service have been sharing a character from the Indian Telugu language that causes iPhones to crash, according to Mashable. The offending users have been putting the character into their Twitter usernames and tweets and encouraging people to share them with their friends. If the character lands in a user’s Twitter feed, it will cause the social app to crash. The app will continue to crash after users try to boot it back up, ultimately stopping victims from accessing the service on their iPhones.

Last week, reports surfaced saying that a single Telugu character was enough to wreak havoc on iPhones. When the character is sent via any messaging or social networking app, the affected user’s app will crash. While it’s an obscure bug that only affects Apple’s iOS 11, it’s one that pranksters and those trying to cause harm are exploiting across the Internet. Worst of all, there’s no fix at the moment and unsuspecting victims needn’t do anything to be affected.

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Apple acknowledged the Telugu bug last week and has promised a fix. The company hasn’t yet delivered, though, and it’s impossible to say when it’ll be released.

According to Mashable, which tested the bug on Twitter, the only way for affected users to regain access to the app is to log in via Safari and block the person that shared the character. At that point, the character won’t show up in their feeds and Twitter will be accessible.

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