By Dana Mattioli And Gillian Tan
NXP Semiconductors NV agreed on Sunday to acquire Freescale
Semiconductor Ltd. in a combination that would create a chip giant
with combined revenue of more than $10 billion.
Under the terms of the agreement, Freescale shareholders will
receive $6.25 in cash and 0.3521 of an NXP ordinary share for each
Freescale common share held. The purchase price implies a total
equity value for Freescale of approximately $11.8 billion, the
companies said.
Richard Clemmer, NXP's chief executive, will continue to be the
President and Chief Executive Officer of the merged company.
The agreement between the companies is the latest sign that the
mergers-and-acquisitions market, which came roaring back to life in
2014, could be in for another strong year.
Freescale traces its lineage to 1948, when Motorola Inc. created
a division in Arizona that would become one of the world's first
semiconductor businesses. The company has made many kinds of chips
over the years, but has recently been best known for products
called microcontrollers, and applications for cars, networking and
industrial equipment.
Freescale, which is based in Austin, Texas, was spun off from
Motorola in 2004 and agreed two years later to be purchased in a
$17.6 billion leveraged buyout by private-equity firms Blackstone
Group LP, Carlyle Group LP, TPG and Permira. The deal was one of a
crop of blockbuster LBOs around that time.
The company went public again in 2011 in a deal that left
Blackstone as its largest stockholder. But the chip maker remained
saddled with a heavy debt load, which totaled about $5.6 billion as
of Dec. 31.
Freescale reported net income of $251 million on net sales of
$4.6 billion last year, both improvements from 2013.
NXP, based in the Netherlands, was previously the semiconductor
arm of the Dutch electronics giant Philips NV. It became
independent as part of a 2006 deal in which ar private-equity group
including KKR & Co., Bain Capital LLC and Silver Lake bought
80% of the business. The group agreed to pay $4.3 billion and
assume some $5 billion in debt. The company went public in 2010;
the private-equity firms have since sold their stakes.
NXP has a broad array of products and a large business in chips
used in cars. It as also been heavily involved with a short-range
wireless technology called near-field communications, which has
been incorporated into some smartphones for purposes such as mobile
payments, a growing field.
NXP's revenue rose 17% to $5.65 billion in 2014; its net income
rose 55% to $539 million.
Write to Dana Mattioli at dana.mattioli@wsj.com and Gillian Tan
at gillian.tan@wsj.com
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