Daily Business Report-Oct. 27, 2016
Qualcomm headquarters (Reuters)
Qualcomm to Buy Holland’s NXP Semiconductors
For $38 Billion in World’s Biggest Chip Deal
Reuters via Times of San Diego
San Diego-based Qualcomm announced Thursday it will buy NXP Semiconductors for about $38 billion in the biggest-ever semiconductor industry deal, expanding the reach of its chips from phones to cars.
The deal will make Qualcomm, which provides chips to Android smartphone makers and Apple, the top supplier of chips to the automotive industry and help to reduce its dependence on the smartphone market.
Qualcomm, which gets most of its profit from wireless patents it licenses to the mobile industry, has been facing slowing smartphone sales and stiff competition from Chinese and Taiwanese rivals.
Qualcomm had sat out the transformative consolidation sweeping the industry, but Thursday’s deal tops Avago’s $37 billion acquisition of Broadcom last year.
The equity value of Qualcomm’s offer is $37.88 billion, according to Reuters calculations based on the company’s 344.4 million diluted shares as of Oct. 2. Including debt, it is worth roughly $47 billion, the companies said.
The combined entity is expected to have annual revenue of more than $30 billion.
Eindhoven-based NXP became the world’s biggest maker of automotive electronics after it acquired U.S.-based Freescale Semiconductor for about $12 billion last December.
Qualcomm said it would offer $110 per share in cash, a premium of 11.5 percent to NXP Semiconductor’s Wednesday’s close.
NXP’s shares, which had risen 20 percent since reports of a potential deal emerged on Sept. 29, were up 2.9 percent at $101.55 in premarket trading on Thursday.
Qualcomm’s shares were up 2.1 percent at $69.64.
The company said it intends to fund the transaction with cash on hand and new debt. Goldman Sachs and JPMorgan are providing committed debt financing for the transaction.
The transaction, which is expected to close by the end of 2017, is structured to use offshore cash flow in a tax-efficient manner to rapidly reduce leverage, Qualcomm said.
The company said it expects the deal to significantly add to adjusted earnings immediately upon its closing, and generate $500 million of cost savings annually within two years after the deal closes.
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Balboa Park Conservancy Awarded
$75,000 Grant to Hire Project Manager
To Take Action on Park Upgrading
The Balboa Park Conservancy has received a $75,000 grant from The Parker Foundation to help fund a project manager for two years who will further the group’s efforts on several initiatives.
Among the current and upcoming projects are a comprehensive tree inventory of the park, the economic impact study, a signage inventory and analysis, the Cultural Landscape Report, and the restoration of the Botanical Building.
To fulfill its mission of enhancing and sustaining Balboa Park for future generations, the Conservancy seeks to gain a greater understanding of the park’s fundamental ecological, cultural, and economic conditions and impacts.
To that end, the Conservancy will enlist the expertise of a project manager experienced in construction, public landscapes, and environmental sustainability to successfully pursue the following projects over the next two years:
- Comprehensive Tree Inventory of the Park — to guide the planning of future reforestation and conservation efforts.
- An Economic Impact Study — to demonstrate the economic value of the park to the region.
- A Signage Inventory and Analysis — to improve the visitor experience and enhance access, circulation, and orientation in all areas of the park.
- A Cultural Landscape Report — to determine the historic value of various elements in the park and guide preservation and restoration planning.
- Restoration of the Botanical Building — to rehabilitate and preserve one of San Diego’s most iconic structures.
The project manager will also assist the Conservancy in coordinating all of its activities with the city of San Diego Park and Recreation Department, consultants, and park stakeholder groups.
“The Conservancy is extremely grateful to The Parker Foundation for providing the financial resources that will enable us to move forward on a number of projects that are essential for sustaining and enhancing the beauty and accessibility of the region’s most cherished cultural resource for the enduring enjoyment of all visitors,” said Conservancy CEO and President Tomas Herrera-Mishler.
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Hemp May be Next Gold Mine
For Native American Tribes
Reuters
Casinos on Native American land have poured billions into tribal economies since the late 1980s, lifting many people from poverty. Now, some hope, cultivating industrial hemp could do the same.
Under U.S. law, hemp — which comes from the same family of plants that produce marijuana — can be grown only for research, with a permit from the U.S. Drug Enforcement Administration. However, the Department of Justice opened the door for hemp cultivation by Native American tribes in 2014 when it agreed that tribes can set cannabis-related laws just as states can.
Native American-owned CannaNative LLC said on Monday it was in final talks with the Navajo Nation, the largest federally recognized tribe, to grow industrial hemp.
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Port Commissioners Approve Permit
To Revamp Shelter Island Boat Launch
The Board of Port Commissioners has approved a Coastal Development Permit for improvements to the Shelter Island Boat Launch facility.
The next step for the project is to receive approval of an Army Corps of Engineers permit and advertising for bids from contractors.
The Shelter Island Boat Launch was originally constructed in the 1950s and underwent upgrades in 1976 and 2005. Currently it services about 50,000 launches per year and is believed to be the busiest boat launch in California.
Construction is anticipated to begin in early 2017 and take approximately 10 months to complete.
The project will demolish and replace the existing 10-lane boat launch ramp and expand the interior of the facility by removing the rock revetment jetty and replacing it with a breakwater wall. The project will also construct public walking platforms with viewing areas that will be located on top of the breakwater walls.
Other work will include replacing the existing docks and gangways, improving the kayak launch area, minor grading of the beach area to restore it to its pre-construction profile, improvements to the restroom, installation of signage, lighting and other associated improvements. More than 600 square feet of eelgrass will also be planted inside the basin.
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San Diego Lawmakers Praise
National Guard Bonus Fix
By City News Service
San Diego-area lawmakers Wednesday applauded a decision by Defense Secretary Ash Carter to suspend an effort by the Pentagon to reclaim enlistment bonuses paid to around 10,000 California National Guard personnel.
The bonuses were paid out around a decade ago to maintain force levels at the height of the country’s wars in Iraq and Afghanistan, but subsequent investigations uncovered widespread overpayments, fraud and mismanagement by California National Guard officials.
Soldiers who received the money said the Pentagon is reneging on agreements and imposing financial hardships on them.
“First, I have ordered the Defense Finance and Accounting Service to suspend all efforts to collect reimbursement from affected California National Guard members, effective as soon as is practical,” Carter said in a statement released by the Defense Department. “This suspension will continue until I am satisfied that our process is working effectively.”
“This isn’t just the right action to take, it’s the only action to take — and I’m pleased that the Secretary of Defense is waiving repayment for most guardsmen,” said Rep. Duncan D. Hunter, R-El Cajon. Hunter and Rep. Darrell Issa, R-Vista, both sent letters to Carter earlier this week demanding a stop to the so-called “clawback” effort by the Pentagon. Via a Twitter posting, Rep. Scott Peters, D-San Diego, said, I applaud this decision from the Secretary of Defense, but I am committed to finding a permanent fix.”
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Google Halting Rollout of Fiber
Internet in San Diego, Other Cities
Reuters
Google is halting the rollout of its much-talked about high-speed Internet service, Google Fiber in San Diego and some other cities.
The company’s Google Access division, which provides the service, also said its chief executive, Craig Barratt, would step down but stay on as an adviser.
The division will also lay off some employees in some cities where the service is not fully operational, it said in a blog post on Tuesday, but did not provide further details.
Tech news website Ars Technica reported, citing a source familiar with the matter, that the division would lay off about 9 percent of its staff.
Google had been expanding the service, which promises Internet speeds of up to 1,000 megabits per second, in several cities in the United States.
“The (blog) post suggests a greater focus on technology and deployment methods, implying a shift toward wireless,” said Stifel analyst Noelle Dilts.
Google bought Internet service provider Webpass, which uses both wireless and fiber technologies, earlier this year for an undisclosed sum.
The rollout of Google Fiber will be paused in Chicago, Dallas, Jacksonville, Los Angeles, Oklahoma City, Phoenix, Portland, San Diego, San Jose, and Tampa, Dilts added. However, services will continue in cities where it is already available, and Webpass is available in San Diego.
CORRECTION ON HOME TOUR
Wednesday’s Daily Business Report had the wrong link to purchase tickets to the Green Homes Tour Nov. 12 sponsored by the San Diego Green Building Council. The correct link is http://www.usgbc-sd.org/event-2296833
Homes on the self-guided tour are located throughout the county, including Mission Hills, Pacific Beach, Poway, Ocean Beach, Leucadia, Chula Vista, Ramona, Jamul and Campo.
The tour runs from 10 a.m. to 3 p.m. Attendees may visit as many of the homes as they would like, meet with industry professionals and learn more about the latest green home design, construction and upgrade options. Tickets are $10 for Green Building Council members and $15 for nonmembers. Students are $5 (with I.D.) and children under 16 are free.
