Freescale acquired by equity firms for $17.6B
SAN JOSE, Calif. Ending a week of speculation, Freescale Semiconductor Inc. Friday (Sept. 15) said that it has agreed to be acquired by a private equity consortium in a transaction worth $17.6 billion. The consortium is led by The Blackstone Group, and includes The Carlyle Group, Permira Funds and Texas Pacific Group.
Under the terms of the agreement, the consortium will acquire all of the outstanding Class A and Class B shares of Freescale for $40 per share in cash. The board of directors of Freescale (Austin, Texas) has unanimously approved the agreement and resolved to recommend that Freescale's stockholders adopt the deal.
In a major surprise, the chip maker first acknowledged it was in discussions with third parties regarding a possible transaction on Monday (Sept. 11). There were apparently two competing groups bidding for Freescale, which spun-off from Motorola Inc. only two year ago.
As reported, a consortium of investment firms were close to finalizing a deal to buy Freescale for about $16 billion, according to a report published earlier this week.
According to the report, the consortium in talks to acquire Freescale included Texas Pacific Group, Blackstone Group and Permira, with the possibility that the Carlyle Group and Bain Capital could also join the group, the report said.
The report went on to say that a second consortium comprising Kohlberg Kravis Roberts & Co. (KKR) and Silver Lake Partners had also submitted an offer for Freescale, but that the alternative bid looked unlikely to succeed because it may have been too little and too late.
At the time, Freescale declined to elaborate, but the chip maker said it was in talks regarding a "possible business transaction." Suddenly, though, Freescale entered into the national spotlight with analysts asking a simple question: Are the company's days numbered?
Many had speculated that Freescale would end up in the hands of KKR, which would merge portions of Freescale with portions of NXP Semiconductor, the former Philips semiconductor unit bought by a KKR-led group last month.
However, the KKR bid apparently fell short, ending speculation that Freescale's wireless and automotive chip units would be spun out, along with NXP's RF and automotive entertainment IC units, into separate companies.