Freescale accepts $17.6B equity buyout
The consortium is paying $40 per share in the deal
IDG News Service - Freescale Semiconductor Inc. has agreed to be acquired by a group of investment firms for $17.6 billion.
A consortium of four private equity firms plans to buy the big Austin-based chip maker for $40 per share in cash. The deal is subject to regulatory approvals and a vote by Freescale shareholders. Freescale's board of directors has unanimously approved the sale, the company announced. The offer price represents an approximately 36% premium over the company's average closing share price in the 30-day period that ended Sept. 8.
Freescale, a spin-off of Motorola Inc., went public on its own in 2004 and had sales of $5.8 billion in 2005. It designs and manufactures embedded networking, wireless, automotive, industrial and consumer product chips.
Under the deal, Freescale is allowed to solicit other proposals for the next 50 calendar days and can respond to unsolicited offers, subject to a deal-breakup fee.
The consortium is led by The Blackstone Group and includes The Carlyle Group, Permira Funds and Texas Pacific Group.
The buyers probably want to split Freescale up into three companies in a series of initial public offerings, according to Forward Concepts Co. analyst Will Strauss. The company has been generally successful in the automotive, networking and wireless chip businesses and has seen its stock rise since the spin-off. Those three main businesses could be easily spun off separately, he said.
It's common for private investors to buy a company so they can make changes that would be harder to carry out if it remained public, said Nathan Brookwood, an analyst at Insight 64.
Even if the board wanted to remain in control of Freescale, they had little choice with private investors willing to pay a significant premium, Strauss said.
"The stockholders would tar and feather the board if they didn't accept the offer," he said.
Freescale is the biggest supplier of automotive chips in North America, has a strong business in processors for network gear and is still the exclusive supplier to Motorola of some key cell phone chips while expanding its customer base, Strauss said. Freescale customers probably won't feel any impact from the buyout, at least in the next six months, he said.
- Case Study: Intuit Turns to Self-Service IT Intuit empowered its users to resolve their own IT issues with a consumer-like experience to free IT to focus on more strategic initiatives....
- Automation for a Better Tomorrow Check out the five most common annoyances facing enterprise IT service desks today, and how automation can resolve all of them. Download the...
- Beyond the Enterprise App Store Leverage proactive, secure and automated IT Service delivery to move beyond the traditional App Store and empower your users. Read the white paper...
- Bridging the Gap Between Business and IT There's a growing gap between business users and IT services. Differences between what users want and what IT can provide are driving a...
- Expert Panel: Enterprise Mobility and Data Loss Prevention When it comes to enterprise mobility, it's not just about devices, it's about the way people work. Hear this expert panel discuss the...
- Princess Cruises collaborates across the globe in the IBM cloud Norm Ayers, Director of Emergency Response and Social Projects at Princess Cruises explains how IBM and Cloud helped the company rapidly scale its... All Management White Papers | Webcasts