2 March 2015

NXP to acquire Freescale for $11.8bn

NXP Semiconductors N.V. of Eindhoven, The Netherlands has agreed to acquire Freescale Semiconductor Ltd of Austin, TX, USA in a transaction that values the combined enterprise at just over $40bn.

The merger creates a high-performance mixed-signal semiconductor firm with combined revenue of more than $10bn, reckoned to become the market leader in both automotive semiconductor solutions and general-purpose microcontroller (MCU) products. The combined firm will also aim to capitalize on the growing opportunities created by accelerating demand for security, connectivity and processing.

"Today's announcement is a transformative step in our objective to become the industry leader in high-performance mixed-signal solutions… focused on the high-growth opportunities in the Smarter World. We fully expect to continue to significantly out-grow the overall market, drive world-class profitability and generate even more cash," says NXP's CEO Richard Clemmer, who will be president & CEO of the merged company.

"Our combined scale, size and global reach will position our new company to deliver sustainable above-market growth," believes Freescale's president & CEO Gregg Lowe. "It will also serve to accelerate the strategic plans both companies have invested in, enabling us to deliver more complete solutions," he adds.

The transaction is expected to be accretive to NXP non-GAAP earnings and free cash flow. NXP anticipates achieving cost savings of $200m in the first full year after closing the transaction, with a clear path to $500m of annual cost synergies.

Freescale shareholders will receive $6.25 in cash and 0.3521 of an NXP ordinary share for each Freescale common share held at the close of the transaction. The purchase price implies a total equity value for Freescale of about $11.8bn (based on NXP's closing stock price as of 27 February) and a total enterprise value of about $16.7bn including Freescale's net debt.

NXP intends to fund the deal with $1bn of cash from its balance sheet, $1bn of new debt and about 115 million NXP ordinary shares. Post transaction (which is expected to close in second-half 2015), Freescale shareholders will own about 32% of the combined firm. 

The transaction has been unanimously approved by the boards of directors of both companies and is subject to regulatory approvals in various jurisdictions and customary closing conditions, as well as the approval of NXP and Freescale shareholders.

Tags: NXP Freescale

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Visit: www.freescale.com