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Freescale also succumbs to private equity |
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Sep 18, 2006 at 01:41 PM |
Following fast on the heels of the Kohlberg Kravis Roberts & Co led $3.4 billion private equity consortium buyout of Philips Electronics last month, a private equity consortium led by The Blackstone Group - including The Carlyle Group, Permira Funds and Texas Pacific Group - has agreed to acquire Freescale Semiconductor for $17.6 billion.
The transaction was on announced Friday, September 15, in which the
consortium will acquire all of the outstanding Class A and Class B
shares of Freescale for $40 per share in cash. This represents a
premium of approximately 36% over Freescale's average closing share
price during the 30 trading days ended September 8, 2006. The deal is
being seen as the largest private equity buyout within the
semiconductor industry and potentially the largest ever made in any
business sector.
Other equity firms had also made bids for
Freescale, which spun-off from Motorola in 2004. The board of directors
of Freescale have unanimously approved the merger agreement and
recommended that Freescale's stockholders adopt the agreement.
However,
the agreement allows Freescale 50 days to seek an alternative deal,
though a $300 million severance clause applies for both Blackstone and
Freescale.
Both Philips Semiconductor, now renamed NXP, and
Freescale are ranked as Top 10 chip manufacturers. The activity from
private equity companies in large scale buyouts is being attributed to
the ease of fund-raising within capital markets and relatively low
borrowing costs.
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