The Wall Street Journal reported last week that Qualcomm (NSDQ: QCOM) is in talks to buy out NXP Semiconductors (NSDQ: NXPI), one of our Special Situations holdings. Shares of NXP have jumped more than 20% since then, surging from about $80 to over $100, and Qualcomm is up more than 8%, so investors clearly think the tie-up makes good strategic sense. They wouldn’t be wrong.

Qualcomm has made its bones mostly in wireless communications, holding key patents on 3G-4G LTE communications. So as our world has grown ever more connected thanks to smartphones, tablets and Internet of Things-enabled devices, Qualcomm’s technologies have been in high demand. It never hurts to spread your wings and diversify though, especially when the potential suitor has a nice tuck-in business.

NXP is best known for making secure connectivity products, such as those that make sure your neighbor’s remote starter doesn’t fire up your car. It also makes other sensors used in the automotive business, like those that turn on headlights in low light, monitor in-vehicle air quality and tell you when your tire pressure is low. It also makes radar chipsets, similar to what Tesla (NSDQ: TSLA) has said it will start using exclusively in its self-driving cars instead of cameras. Some of NXP’s technology is also found in phones, such as the chips that allow phones to be used at point-of-sales terminals (think Apple Pay).

The acquisition of NXP would add quite a bit of heft to Qualcomm’s technology lineup while also breaking it into the automotive market in a big way. It would likely appease activist investors who were pressuring Qualcomm to split its business up last year in order to drive greater growth, a plan that was ultimately scuttled. That’s basically killing three birds with one stone and Wall Street analysts are clearly onboard, issuing a flurry of positive research notes about the possible deal over the past week.

I’ve got to stress though – this is a POSSIBLE deal.

While there have been a lot of “people briefed on the matter” and “unnamed insiders who aren’t authorized to speak” quoted about the deal, some going so far as to point out a possible $200 million cost savings that could be realized in a merger, so far neither company has officially acknowledged that talks are going on. Even the “more than $30 billion” price tag the WSJ mentioned when it first reported the talks was basically an educated guess, especially as NXP’s market capitalization has since shot up past $37 million. Just by mentioning a possible price, the WSJ might have substantially increased it.

That means that while the deal makes sense, Wall Street analysts are thrilled and the market’s clearly on board and I would love to see it go through, it’s by no means a done deal yet. And with the sharp jump NXP’s shares have taken since the news, I wouldn’t chase it either. If for some reason the marriage doesn’t work out as planned, NXP is going to fall hard, quite possibly below our buy target. That wouldn’t be a bad thing though, since we like NXP just fine as it is – but we’d like it even better if the buyout happens.

NXP Semiconductor is now a ‘hold’ in the BTP Special Situations portfolio until more details emerge