NXP and Freescale to merge

March 2, 2015

NXP Semiconductors N.V. and Freescale Semiconductor Ltd. today announced that they have entered into a definitive agreement under which NXP will merge with Freescale in a transaction that values the combined enterprise at just over $40 billion1. The companies report that the merger will create a mixed-signal semiconductor company with combined revenue of greater than $10 billion. The merged entity will focus on automotive semiconductor and general-purpose microcontroller (MCU) products as well as security and connectivity. Recently introduced NXP products include a portfolio of LPC microcontrollers that offers devices rated for temperatures up to 105°C. Recent Freescale products include the RF Power Tool System, designed to simplify the development of RF power applications.

“Today’s announcement is a transformative step in our objective to become the industry leader in high-performance mixed signal solutions,” said Richard Clemmer, NXP chief executive officer, in a press release. “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.” Clemmer will become 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,” added Gregg Lowe, Freescale semiconductor president and chief executive officer. “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.”

NXP traces its history to Philips Semiconductors, while Freescale traces its history to Motorola.

According to Dana Mattioli and Gillian Tan in The Wall Street Journal, “The agreement between the companies is the latest sign that the mergers-and-acquisitions market, which came roaring back to life in 2014, could be in for another strong year.”

Note

1. Merger value represents enterprise value as of the market close on February 27, 2015.

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