NXP Semiconductors To Buy Freescale In $16.7 Bln Cash, Stock Deal

(RTTNews) - Mixed signal solutions provider NXP Semiconductors N.V. (NXPI) agreed Sunday to acquire embedded processing solutions provider Freescale Semiconductor Ltd (FSL) in a cash an stock deal valued at about $16.7 billion, including Freescale's net debt of $4.9 billion. The deal will create a merged entity that will be the market leader in automotive semiconductor solutions and the market leader in general purpose microcontroller (MCU) products.

"The combination of NXP and Freescale creates an industry powerhouse 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, which taken together will maximize value for both Freescale and NXP shareholders," NXP CEO Richard Clemmer said in a statement.

The deal will create a combined enterprise at just over $40 billion, including debt, that will generate a combined annual revenue of greater than $10 billion. NXP has a current market capitalization of $21.37 billion, while FSL is valued at $11.06 billion.

The deal will see Freescale shareholders receiving $6.25 in cash and 0.3521 of an NXP ordinary share for each Freescale common share held at the close of the transaction, implying a value of $36.1 per share, based on NXP closing price of $84.89 on Friday.

However, the offer price does not represent any premium over Freescale's closing price of $33.11 on Friday.

Eindhoven, Netherlands-based NXP said it intends to fund the deal with $1 billion of cash from its balance sheet, $1 billion of new debt and about 115 million NXP ordinary shares.

Following the closure of the deal, Freescale shareholders will own about 32 percent of the combined company, which will continue to be led by Clemmer as the president and CEO of the merged company.

Meanwhile, the deal is expected to be accretive to NXP's adjusted earnings per share and adjusted free cash flow. NXP anticipates achieving cost savings of $200 million in the first full year after closure of the deal, with annual cost synergies of $500 million.

The deal, unanimously approved by the boards of of both companies, is expected to close in the second half of calendar 2015. The deal is primarily subject to the approval of NXP and Freescale shareholders as well as regulatory approvals.

"We believe this merger, which combines two highly successful and complementary companies, will create significant value for Freescale's and NXP's shareholders, customers and employees. Both companies have built leadership positions and have a sharp focus on delivering superior value to customers," Freescale President and CEO Gregg Lowe stated.

Austin, Texas-based Freescale Semiconductor was formed by the divestiture of the semiconductor products segment of Motorola in 2004. Freescale was then acquired by a consortium led by private equity firm Blackstone Group LP (BX) for the sum of $17.6 billion in December 2006. The buyout firms still own 64 percent of Freescale.

The company was formerly known as Freescale Semiconductor Holdings I, Ltd. and changed its name to Freescale Semiconductor, Ltd. in April 2012.

NXPI closed Friday's regular trading session at $84.89, down $0.07 or 0.08% on a volume of 1.66 million shares, while FSL closed at $36.11, up $0.14 or 0.39% on a volume of 1.13 million shares.