By Dana Mattioli and Gillian Tan 

NXP Semiconductors NV and Freescale Semiconductor Ltd. have agreed to merge in a deal that values Freescale at $11.8 billion and which would create a combined company with a market value of more than $30 billion.

NXP said Sunday night that it would pay about $36.14 a share in cash and stock for Freescale, which represents a narrow premium to its closing price Friday of $36.11 a share. The stock had been buoyed recently by reports about a possible sale of the company.

The deal would give Freescale shareholders about 32% of the merged company. Credit Suisse Groupadvised NXP on the transaction. Morgan Stanley advised Freescale.

NXP, which is based in the Netherlands, said the merger provides a "clear path" to $500 million of annual cost synergies, with $200 million in cost savings to be realized in the year following the deal's completion.

The agreement 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 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 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 was previously the semiconductor arm of the Dutch electronics giant Philips NV. It became independent as part of a 2006 deal in which a 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

Access Investor Kit for Freescale Semiconductor Ltd.

Visit http://www.companyspotlight.com/partner?cp_code=P479&isin=BMG3727Q1015

Access Investor Kit for The Blackstone Group LP

Visit http://www.companyspotlight.com/partner?cp_code=P479&isin=US09253U1088

Access Investor Kit for Morgan Stanley

Visit http://www.companyspotlight.com/partner?cp_code=P479&isin=US6174464486

Access Investor Kit for Motorola Solutions, Inc.

Visit http://www.companyspotlight.com/partner?cp_code=P479&isin=US6200763075

Subscribe to WSJ: http://online.wsj.com?mod=djnwires

Blackstone (NYSE:BX)
Historical Stock Chart
From Feb 2024 to Mar 2024 Click Here for more Blackstone Charts.
Blackstone (NYSE:BX)
Historical Stock Chart
From Mar 2023 to Mar 2024 Click Here for more Blackstone Charts.