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
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