NXP and Freescale in merger agreement


NXP Semiconductors and Freescale Semiconductor have entered into a definitive agreement under which NXP will merge with Freescale in a transaction which values the combined enterprise at just over US$40 billion.

According to NXP the merger creates a high performance mixed signal semiconductor industry leader, with combined revenue of greater than US$10 billion. The merged entity will become the market leader in automotive semiconductor solutions and the market leader in general purpose microcontroller (MCU) products. The combined company will capitalise on the growing opportunities created by the accelerating demand for security, connectivity and processing.

“Today’s announcement is a transformative step in our objective to become the industry leader in high performance mixed signal solutions. 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 maximise value for both Freescale and NXP shareholders,” says Richard Clemmer, NXP chief executive officer. Mr Clemmer will continue to be the president and chief executive officer of the merged company.

“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. Our combined scale, size and global reach will position our new company to deliver sustainable above market growth. It will also serve to accelerate the strategic plans both companies have invested in, enabling us to deliver more complete solutions to customers,” says Gregg Lowe, Freescale Semiconductor president and chief executive officer.

The transaction is expected to be accretive to NXP non-GAAP earnings and non-GAAP free cash flow. NXP says it anticipates achieving cost savings of US$200 million in the first full year after closing the transaction, with a clear path to US$500 million of annual cost synergies.

Under the terms of the agreement, Freescale shareholders will receive US$6.25 in cash and 0.3521 of an NXP ordinary share for each Freescale common share held at the close of the transaction. The purchase price implies a total equity value for Freescale of approximately US$11.8 billion (based on NXP’s closing stock price on February 27, 2015) and a total enterprise value of approximately US$16.7 billion including Freescale's net debt.

The transaction is expected to close in the second half of calendar 2015. NXP intends to fund the transaction with US$1.0 billion of cash from its balance sheet, US$1.0 billion of new debt and approximately 115 million NXP ordinary shares. Post transaction, Freescale shareholders will own approximately 32% of the combined company.

The transaction has been unanimously approved by the boards of directors of both companies and is subject to regulatory approvals in various jurisdictions and customary closing conditions, as well as the approval of NXP and Freescale shareholders.

Credit Suisse acted as exclusive financial adviser to NXP, along with Simpson Thacher & Bartlett and De Brauw Blackstone Westbroek, who served as legal advisers. Credit Suisse is also providing committed financing for the transaction. Morgan Stanley acted as exclusive financial adviser to Freescale, along with Skadden, Arps, Slate, Meagher & Flom who served as legal adviser.

Related articles

Subscribe to our free newsletter
Follow us on Twitter
Join us on LinkedIn

NXP and Freescale in merger agreement
NXP and Freescale in merger agreement

Latest Features & Interviews

White paper: Gemalto - The paper elements of a passport

An expert’s guide to using the paper elements of a passport.

INTERVIEW: Gemalto‘s Xavier Larduinat on the future of borders and digital identities

Xavier Larduinat, Marketing & Communication manager for Innovation at Gemalto, explores the future of digital identity, the Thales acquisition and other trends in an exclusive interview with Security Document World.

Interview: Sean Farrell, Head of Portfolio Management, Government Solutions, SITA

Planet Biometrics discussed the future of biometric travel technology with Sean Farrell, head of Portfolio Management, Government Solutions, SITA.

More articles >>
Share |

Sponsored Links

SDW Conference and Exhibition
SDW is a world-leading conference and exhibition providing a global showcase for next-generation secure credentialing solutions.