News

16 September 2006

 

Freescale to be acquired for $17.6bn

Five days after confirming it was "in discussions with parties relating to a possible business transaction", on 15 September Freescale Semiconductor Inc of Austin, TX, USA has agreed to be acquired by a private-equity consortium
led by The Blackstone Group, and including The Carlyle Group, Permira Funds and Texas Pacific Group.

The offer of $40 per share in cash ($17.6bn) represents a premium of 7.6% over Friday's closing share price of $37.16 on the New York Stock Exchange, and a premium of 36% over the average closing share price in the 30 trading
days after the first reports of a potential sale (the share price surged more than 20% on 11 September, when Freescale acknowledged the possible deal). Freescale's board has now unanimously approved the agreement and
recommends it to stockholders.

Freescale, which makes chips for wireless, networking, automotive, consumer and industrial markets, was spun off by cell-phone maker Motorola Inc as an independent publicly traded company in July 2004. It has 24,000 staff in
more than 30 countries (including its 38,000ft2 6-inch wafer GaAs fab in Tempe, AZ, USA, which makes power amplifier products). Motorola remains one of Freescale's largest customers. Total sales in 2005 were $5.8bn. It is the
world's 10th largest semiconductor company, based on shipments of ICs.

The deal includes a provision under which Freescale may solicit alternative bids from third parties during the next 50 days. The New York Times had previously reported that the Blackstone-led consortium had offered $39 a share, but a second private-equity consortium including Kohlberg Kravis
Roberts & Co. (KKR), Silver Lake Partners, Apax Partners and Bain Capital had submitted a late, rival bid. However, now, under the agreement with the Blackstone-led consortium, if Freescale accepts a superior proposal, it
would have to pay a break-up fee.

The deal is the second major purchase of a semiconductor company since early August, when a consortium formed by KKR, Bain Capital, Silver Lake Partners, Apax Partners and AlpInvest Partners NV won out over a Blackstone, Permira
and Texas Pacific group to acquire an 80.1% stake in Philips Semiconductors (renamed NXP Semiconductors on 1 September). See related item.

Visit: http://www.freescale.com