Qualcomm executives no longer expect the Chinese government to approve its deal for semiconductor manufacturer NXP, and CEO Steve Mollenkopf plans to lay out the company’s share buyback plan when Qualcomm announces earnings after the closing bell today, according to a person familiar with the matter.
Qualcomm announced a new $10 billion repurchasing program in May. It is expected to add billions more to that amount if it walks away from NXP.
While there’s still a chance China’s State Administration for Market Regulation, or SAMR, could make a last minute announcement before 11:59 pm ET, Qualcomm now sees the likelihood of an agreement as very slim, said the person, who asked not to be named because the company’s discussions are private.
CNBC’s David Faber previously reported that Qualcomm would not extend its deadline beyond today if the deal was not approved.
SAMR doesn’t need to formally make an announcement accepting or rejecting the deal. If it doesn’t make a ruling, the self-imposed deadline between Qualcomm and NXP will expire. Qualcomm will have to pay NXP a $2 billion breakup fee.
NXP shares dropped on the news, and are down about 3 percent on the day.
San Diego-based Qualcomm first agreed to buy Netherlands-based NXP for about $38 billion in 2016, but some NXP shareholders resisted a sale seeking a better price. Qualcomm upped its bid to $44 billion in February, but the deal has been held up by Chinese regulators amidst a growing trade conflict between the U.S. and China centered around the Trump administration’s imposition of tariffs on some Chinese manufactured goods.
The buyout could have helped which provides chips to Android smartphone makers and Apple, to expand in the fast-growing market for chips used in automobiles and reduce its dependence on a cooling smartphone market.
Earlier this year, Broadcom‘s attempt to buy Qualcomm was blocked by the Trump administration over national security concerns.
Reuters contributed to this report.
