NXP and Freescale Merge Postscript: Achieve Eighth Largest Semiconductor Manufacturer

2015-03-03

The two parties have signed a final merger agreement, which is expected to be completed in the second half of this year. NXP will remain a surviving company in this merger and will become a semiconductor company with assets of 40 billion. The annual revenue will exceed 10 billion US dollars, making it a leader in automotive semiconductor solutions and general-purpose microcontroller products.

The two major semiconductor manufacturers, NXP from the Netherlands and Freescale from the United States, announced today (3/2) that they have signed a final merger agreement and are expected to complete the merger in the second half of this year. After the merger, they will become a semiconductor company with 40 billion assets and an annual revenue of over 10 billion US dollars, becoming leaders in automotive semiconductor solutions and general-purpose microcontroller products.

NXP, founded in the Netherlands in 1953, was originally a semiconductor company under Philips. It was renamed NXP Semiconductors after being sold to private equity funds in 2006. NXP mainly provides mixed signal and standard product solutions, which are widely used in smart cars, wireless architecture, lighting, industrial, mobile, consumer, and computing products.

Freescale was originally owned by Motorola and was acquired by a private equity fund in 2006. It is a semiconductor design, research and development, and manufacturer, mainly developing and producing software/hardware suitable for the automotive, networking, industrial, and consumer markets, such as microcontrollers, microprocessors, digital signal processors, digital signal controllers, sensors, wireless radio frequency power chips, and power management chips. NXP and Freescale are both among the top 20 semiconductor manufacturers in the world, with NXP slightly surpassing Freescale in terms of manpower and revenue.

According to the agreement between the two parties, Freescale's shareholders will receive $6.25 in cash per share and 0.3521 shares of NXP stock, valued at approximately $11.8 billion. If Freescale's liabilities are calculated, the merger size will reach $16.7 billion. After the transaction is completed, Freescale shareholders will acquire 32% of NXP shares.

This represents that NXP will be the surviving company in this merger, and NXP CEO Richard Clemmer will continue to serve as the President and CEO of the new company. Clemmer stated that this is an important step for both parties to become leaders in efficient mixed signal solutions. In the future, they will focus on growth opportunities in the smart world and expect to surpass the global average growth.

Market analysis indicates that after the merger of NXP and Freescale, they will become the world's eighth largest semiconductor manufacturer, both of which are major suppliers of automotive chips, and are expected to profit from the increasingly computationalized automotive market.