American chipmaker Qualcomm has agreed a deal for Dutch company NXP Semiconductors valuing the firm at $44bn (£31bn), lifting its offer to $127.50 per share from $110.
Qualcomm, which provides chips to Android smartphone makers, said it has the backing of the shareholder group led by hedge fund Elliott Management, which had blocked its previous proposal saying it undervalued NXP.
The move comes in the face of a hostile takeover effort by fellow tech giant Broadcom, which criticised the development and said it was evaluating its options. It said the revised price for NXP was "well beyond" what Qualcomm had repeatedly called "a full and fair price".
In a statement, it said: "Broadcom believes the price increase demonstrates the Qualcomm board's disregard for its fiduciary duty to mazimise value for Qualcomm stockholders."
In November, Broadcom revealed a $103bn proposal to purchase Qualcomm, which was shrugged off as too low. That was then followed up by a higher offer this month, but the proposal was contingent on Qualcomm maintaining its lower $110-a-share bid for NXP.
A successful acquisition of NXP would put the pressure on Broadcom to abandon its takeover attempt of Qualcomm, or return with a higher price.
Steve Mollenkopf, Qualcomm's chief executive, said the combined businesses offer "a compelling value proposition".
"With only one regulatory approval remaining, we are working hard to complete this transaction expeditiously," Mollenkopf said.