Will this deal ever get done?

Qualcomm Inc. (QCOM - Get Report) on Tuesday Feb. 20, revealed that it scored a big victory in its effort to close its acquisition of NXP Semiconductors N.V. (NXPI - Get Report) after the chipmaker hiked its bid to $127.50 a share, or $45 billion, in a move that appeased the activist investor, Paul Singer's Elliott Management, that was at its gate.

Many observers consider that approval from Singer's fund represented the biggest hurdle remaining for Qualcomm in its effort to close its NXP acquisition. And the increased prospects for the deal's consummation also creates yet another complicating factor for chipmaker Broadcom Ltd. (AVGO - Get Report) , which is seeking to acquire Qualcomm and recently hiked its hostile bid for the chipmaker to $82 a share.

In a statement on Tuesday Broadcom said it was "evaluating its options" and added that the price hike represents a "disregard for its fiduciary duty to maximize value for Qualcomm shareholders," comments that raise questions about whether it will continue to pursue its hostile bid.

Qualcomm said in a statement that it was increasing its bid from a previous $110 for NXP and that it has secured binding agreements from more than 28% of NXP's shares for the higher offer. It also added that Elliott Management and Soroban Capital Partners LP, another sometimes activist fund, have both agreed to tender their shares at that price, a 16% increase from its previous offer. Elliott Management owns a 7.2% stake, the majority of it made up of common shares. In addition, Qualcomm said it lowered the minimum tender conditions for it to be able to close its acquisition from 80% of NXP shares to 70%.

"Elliott believes that this revised transaction is an attractive outcome for shareholders of both Qualcomm and NXP," the fund said in a statement.

The move is a big win for Qualcomm and allows it to move one step closer to the consummation of its acquisition. Qualcomm is still seeking approval from 42% of NXP shares it still needs to close the deal and it also still needs approval from the Ministry of Commerce in China, but it has already received the go-ahead from the other eight government regulators it needs for the deal.

However, it looks increasingly likely that Qualcomm will be able to close the transaction in the coming months, a move that could encourage Qualcomm shareholders to vote against Broadcom's hostile acquisition offer.

Broadcom has said it would agree to acquire Qualcomm whether or not the NXP deal is completed. However, its comments on Tuesday suggesting that Qualcomm may be paying too much for NXP, indicate that it might cancel its bid shortly.  In addition, on Saturday, Feb. 17, Broadcom received a major blow to its hostile acquisition effort after influential investor advisory firm Institutional Shareholder Services recommended that investors only back a minority of four out of six dissident director candidates it had nominated for Qualcomm's 11-person board.

The ISS recommendation is a major setback for Broadcom's hostile bid because if investors follow the proxy adviser's recommendation it would still leave a majority of Qualcomm's incumbent board -- seven incumbent directors -- in place at the company's annual meeting slated for March 6. If instead all six of Broadcom's dissident slate are elected, it would immediately result in the chipmaker accepting the company's unsolicited bid, which is valued at about $146.4 billion including debt.

It is far more likely that Broadcom's bid would be rejected if the election concludes and there are seven incumbent Qualcomm directors remaining -- a majority -- on board. 

Nevertheless, the recommendation doesn't represent a total victory for Qualcomm. That is because if four Broadcom dissidents obtain seats on Qualcomm's board they would just need to convince two of the remaining seven incumbent Qualcomm directors to back their hostile bid efforts for a deal to be closed. ISS appeared to suggest that the combination of incumbent and dissident directors would force both sides to work out a deal that they both felt served Qualcomm shareholders best.

In addition, on Tuesday, Broadcom said it had received backing for all six of its dissident candidates from the other major proxy advisory firm, Glass Lewis. That should represent a boost for Broadcom's bid, though the chipmaker noted that Glass Lewis also noted that any increase in offer price from Qualcomm for NXP "would be to the determent of Qualcomm shareholders and lower the overall merits of the transaction."

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