The San Diego, California-based Qualcomm, Inc. (NASDAQ:QCOM) is taking over NXP Semiconductors from the Netherlands for about $38 billion. At this price, it would be the biggest chip deal ever in the world. Together, the new business will have revenues of $30 billion and will become a semiconductor industry powerhouse.

There has been speculation for weeks that the two businesses might come together soon. It was revealed on Thursday that the two businesses have agreed to Qualcomm paying $110 for each stock of NXP (NASDAQ:NXPI), which is an 11.5 percent premium over the closing price of Wednesday. The total valuation of the deal would come to $47 billion.

Board of directors of both the businesses has approved the deal. However, the deal will be officially closed only by the end of 2017. It was further learned that Qualcomm will fund the purchase with debt and cash.

Steve Mollenkopf, the Qualcomm CEO said, “The NXP acquisition accelerates our strategy to extend our leading mobile technology into robust new opportunities”.

Stock of NXP Semiconductors and Qualcomm Both Go Up

At $110 for each stock of NXP, shareholders of Qualcomm know that they are getting a good deal because this is at the low end of the spectrum. The Qualcomm stock went up by 4.8 percent after the announcement was made. Many in NXP are naturally not happy with the agreed upon price. Not just them, but even the analysts are also questioning this. But even the NXP Semiconductors’ stock went up, though marginally.

The stock of both the businesses has been climbing since reports began to come out in the media that they were in talks about a possible merger.

The Qualcomm (NASDAQ:QCOM) stock has gone up by 36 percent this year, while the NXP stock has also climbed by 17 percent.

NXP Has Been Trying to Sell for Sometime

NXP was earlier in talks with Texas Instruments Inc. and Intel Corp. for a takeover, but they backed down eventually. They were also discussing a price of $120 for each share. In fact, initially, NXP wanted $120 from Qualcomm as well. But in the absence of any other buyers, they were unable to fetch that price.

Qualcomm dominates the smartphone chip space. With this acquisition, the business will now be able to expand their reach in the automotive chips market. However, in recent times, the smartphone chip business has shown signs of slowing down. So for Qualcomm at least, the deal certainly makes sense.