By Susan Heavey and Sonam Rai
WASHINGTON / BENGALURU (Reuters) – NXP Semiconductors followed Qualcomm Inc by announcing share purchases worth thousands of dollars on Thursday when companies attempted to compensate investors for the collapse of their $ 44 billon merger due to Chinese opposition.
U.S .. Treasury Secretary Steven Mnuchin said it was unfortunate that China had not given regulatory approval for the deal, seen by analysts as quid pro quo for concessions made by Washington on Chinese phonemaker ZTE.
"I'm very disappointed that they did not get regulatory approval," Mnuchin told CNBC in an interview.
"I think this is another example of where it was approved in each other territory. We only look for American companies being treated fairly."
Qualcomm had to pay NXP a long term discontinuation of NOK 2 billion at. 9.00 o'clock and the Dutch chip maker said that it would buy back 5 billion dollars of shares.
Qualcomm's Board Wednesday increased its own buyback authorization to $ 30 billion.
Qualcomm shares rose 5 percent in trading before the clock on Thursday while NXP shares sank 10 percent – a level the company has not seen since Qualcomm made a bid for the company in October 2016.
"The decline in stock price today reflects partially failed acquisition, but also disappointing Q2 results today, says CFRA analyst Angelo Zino.
"We see resumption of repurchase as a positive, but the company is unlikely to find another suitor who provides today's M & A landscape in the semiconductor industry. "
An agreement would have helped Qualcomm reduce its dependence on mobile chips by expanding NXP's position as the world's largest auto electronics manufacturer.
But the collapse of what would be the largest chip industry merger also gives freedom to concentrate address other issues in the business that promise more growth, as well as resolve a number of legal conflicts over patents on patents.
"While we are disappointed, the NXP merger was abandoned for long-term operations, at least now there is some strategic clarity," Cowen analysts write in a client memo.
Increasing customer resistance to Qualcomm licensing practices has resulted in billions of dollars in regulatory fines, leaving the chipmaker to search for new ways to expand beyond its decade-long dominance in chips for the mobile phone market, where growth has slowed.
With the NXP merger failing, Qualcomm must now prove that it could advantageously diversify its business to move the overall economic needle, analysts said.
NXP, on the other hand, must prove that the disturbance resulting from the agreement did not prevent growth prospects. The company will host the first earning call for almost two years on Thursday.
(Writing of Supantha Mukherjee, Editing Patrick Graham)