18 September 2015

European Commission approves NXP's acquisition of Freescale, conditional upon NXP divesting RF power business

Under the EU Merger Regulation, the European Commission in Brussels, Belgium has approved the proposed acquisition of Freescale Semiconductor Ltd of Austin, TX, USA by NXP Semiconductors N.V. of Eindhoven, The Netherlands (announced in March), conditional upon NXP divesting its radio frequency power business to address the Commission's concerns that the takeover could otherwise have led to higher prices and less competition in this specific market.

The Commission found that the two companies' semiconductor product portfolios were mostly complementary, except for RF power transistors (where NXP and Freescale are the two largest players and close competitors) in particular those used in base stations for mobile telecoms. The Commission was concerned that after the merger, as originally notified, the remaining companies on the market would have been unable to exercise sufficient competitive pressure on the merged entity. This could have led to price rises and a reduced choice for customers.

To address these concerns, NXP offered:
* to sell its RF power business, consisting all key assets and personnel, except assets necessary for front-end manufacturing of these products (i.e. wafers processing);
* a manufacturing agreement with a third-party foundry to perform front-end manufacturing services for the divested business;
* to provide the RF power business with the transitional manufacturing and services agreements required to guarantee business continuity.

The European Commission says that the commitments offered by NXP will allow the purchaser of the divested business to replicate NXP's previous role in the RF power transistors market, maintaining effective competition. The commitments completely remove the overlap between the RF power transistor activities of NXP and Freescale, and hence adequately address the competition concerns identified by the Commission.

See related items:

NXP and Freescale shareholders' meetings approve merger

NXP to acquire Freescale for $11.8bn

Tags: NXP Freescale

Visit: www.nxp.com

Visit: www.freescale.com