Yesterday Qualcomm unveiled a sweetened $44 billion agreement to acquire NXP Semiconductors, and it is being seen as a defence move against the Broadcom takeover. At the time, Qualcomm said that the increased pay out was because NXP had a good year and its value had increased.

But the new deal puts pressure on Broadcom to decide if it will stick with a stipulation in its bid that Qualcomm does not raise its offer for NXP. It could strengthen Qualcomm’s defences because it allows its shareholders to better assess the standalone value of Qualcomm as an alternative to a deal with Broadcom.

$60 in cash and $22 in Broadcom shares

Qualcomm shares fell 1.3 percent to $63.99, significantly below Broadcom’s latest $82 per share cash-and-stock offer unveiled on Feb. 5, as investors saw the new NXP deal as increasing the chances of Qualcomm repelling Broadcom.

Broadcom said  it was evaluating its options in response to Qualcomm’s move and noted that the revised price for NXP was well beyond what Qualcomm has repeatedly said was “full and fair”. It called the new deal a transfer of value from Qualcomm shareholders to NXP shareholders.

Qualcomm’s presiding board director Tom Horton argued that the revised deal with NXP represented value for Qualcomm shareholders irrespective of the outcome of the takeover battle with Broadcom.

“It makes Qualcomm stronger and more profitable and diversified if there is no deal with Broadcom, and if we do decide to pursue a sale the same is true, more value will accrue to the Qualcomm shareholders”, Horton said.

From $110 to $127.50 per share

Qualcomm raised its offer for NXP from $110 to $127.50 per share in cash. In exchange, it received binding agreements from nine NXP stockholders that collectively own more than 28 percent of NXP’s outstanding shares to support the deal. These include hedge funds Elliott Advisors (UK) Ltd and Soroban Capital Partners LP, which had spearheaded opposition to the NXP deal.

Under the new terms agreed with NXP’s board, the deal with Qualcomm is contingent on 70 percent of NXP’s shares being tendered, instead of the 80 percent threshold required in the earlier agreement signed in October 2016. Once this threshold is reached, Qualcomm can takeover the entire company through a “second-step” transaction mechanism.

The acquisition of NXP will help Qualcomm to expand in the fast growing market for chips used in automobiles and reduce its dependence on the competitive smartphone market.

To put pressure on Qualcomm, Broadcom has put forward six nominees up for election at Qualcomm’s March 6 shareholder meeting to replace the majority of the company’s eleven member board of directors.

Proxy advisory firm Glass Lewis has recommended Qualcomm shareholders vote for all six director nominees Broadcom has put forward.