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Recently it was announced that QCOM plans to acquire NXP in a deal taht values NXP at \$110 per share. In this case I would expect that the shares of NXP should rise up and hit the \$110 mark and stay there until the acquisition formally completes. But NXP shared are around $98-99 --- why?

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Qualcomm must get UE authorities approval on anti-trust concerns before proceeding with the acquisition (because NXP is a dutch company) so the deal has a chance not to go through. Qualcomm is already embroiled in an antitrust issue with the UE.

Thus as there is a non-zero probability of the deal not going through, the share is not trading at the tendered price.

https://www.bloomberg.com/news/articles/2016-10-27/qualcomm-must-woo-eu-antitrust-foes-to-win-blessing-for-nxp-bid

http://www.fool.com/investing/2016/11/21/is-qualcomm-trying-to-close-the-nxp-semiconductors.aspx

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  • $\begingroup$ Does this mean that there is a potential ~$10/share upside if I invest in NXP and the acquisition completes? $\endgroup$ – O.K. Dec 16 '16 at 20:42
  • $\begingroup$ Yes, if you buy you're basically betting that the acquisition will go through, if it does you'll be able to sell your shares to QCOM at 110 $ $\endgroup$ – Lliane Dec 28 '16 at 3:58

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