NXP, Freescale In $40 Bln. Merger

(RTTNews) - NXP Semiconductors N.V. (NXPI) and Freescale Semiconductor Ltd (FSL) on Sunday said they entered into a definitive agreement under which NXP will merge with Freescale in a deal which values the combined enterprise at just over $40 billion.

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

Under the terms of the agreement, Freescale shareholders will receive $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 $11.8 billion (based on NXP's closing stock price as of February 27, 2015) and a total enterprise value of approximately $16.7 billion including Freescale's net debt.

The deal is expected to close in the second half of calendar 2015. NXP 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. Post transaction, Freescale shareholders will own about 32 percent of the combined company.

The deal has been unanimously approved by the boards of 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.

NXP said the merger creates a high performance mixed signal semiconductor industry leader, with combined revenue of greater than $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 capitalize on the growing opportunities created by the accelerating demand for security, connectivity and processing.