|9 Months Ended|
Jun. 24, 2018
On October 27, 2016, the Company announced a definitive agreement (as amended on February 20, 2018 and April 19, 2018, the Purchase Agreement) under which Qualcomm River Holdings, B.V. (Qualcomm River Holdings), an indirect, wholly owned subsidiary of QUALCOMM Incorporated, proposed to acquire NXP Semiconductors N.V. (NXP). Pursuant to the Purchase Agreement, Qualcomm River Holdings is conducting a tender offer to acquire all of the issued and outstanding common shares of NXP, which will expire at 5:00 p.m. New York time on July 25, 2018, unless extended or earlier terminated, in either case pursuant to the terms of the Purchase Agreement.
The transaction remains subject to receipt of regulatory clearance from SAMR and other closing conditions, including the tender of at least 70% of the issued and outstanding common shares of NXP in the tender offer. In the absence of such approval or other material developments, the Company expects to terminate the transaction after 11:59 p.m. New York time on July 25, 2018, which is the “End Date” for the transaction under the Purchase Agreement. In accordance with the terms of the Purchase Agreement, in the absence of approval from SAMR prior to the End Date, NXP will be entitled to receive a termination fee of $2.0 billion from Qualcomm River Holdings, which will be paid using existing cash and cash equivalents.
If events occur that cause the Company to not terminate the transaction, the Company will continue to pursue the acquisition of all of the issued and outstanding common shares of NXP for $127.50 per share in cash, representing estimated total cash consideration to be paid to NXP’s shareholders of $44 billion, in accordance with the Purchase Agreement. In such case, the Company could be required to pay NXP a termination fee of $2.0 billion if the transaction is subsequently terminated in certain circumstances, as set forth in the Purchase Agreement.
Qualcomm River Holdings entered into four letters of credit for an aggregate amount of $2.0 billion related to the potential termination fee payable to NXP. Pursuant to the terms of each letter of credit, NXP will have the right to draw amounts to fund certain termination compensation owed by Qualcomm River Holdings to NXP if the Purchase Agreement is terminated under certain circumstances, as described above. The letters of credit expire on December 31, 2018 or if drawn on or surrendered by NXP or surrendered by Qualcomm River Holdings. Upon the Company’s payment of the termination fee, NXP will no longer have the right to validly draw on the letters of credit. Each letter of credit is required to be fully cash collateralized in an amount equal to 100% of its face value through deposits with the issuers of the letters of credit. Qualcomm River Holdings is restricted from using the funds deposited as collateral while the letters of credit are outstanding. At June 24, 2018, the letters of credit were fully collateralized through bank time and demand deposits, which were included in other noncurrent assets.
The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable).
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef