Darspal S Mann
Dec. 7, 2015, 1:26 PM
- Less than two weeks after Chinese and U.S. approval was announced, NXP (NXPI -3.4%) and Freescale (FSL -2.8%) have officially closed their merger, a deal that's one of the chip industry's largest in history and which creates the biggest player in the fragmented microcontroller market.
- As previously announced, NXP is paying $6.25/share in cash + 0.35 shares (current value of $30.60) for each Freescale share. NXP forecasts immediate EPS accretion and $200M/year in 2016 cost synergies, with "a clear path" to $500M/year in synergies.
- NXP and Freescale are off on a day the Nasdaq is down 1%. During a Bloomberg interview, NXP CEO Richard Clemmer promises the post-merger company "can outgrow the semiconductor industry by 50%."
Nov. 27, 2015, 2:08 PM
- NXP Semiconductors (NASDAQ:NXPI) jumped 4.6% in the short session today, and Freescale (NYSE:FSL) gained 4%, after the two won approval from China's Ministry of Commerce to finish their $40B merger -- a last major hurdle to the deal.
- The EU and U.S. FTC had signed off previously. The companies now expect to close Dec. 7, concurrent with the divestment of NXP's RF amplifier unit.
- The two have predicted $500M in eventual annual cost synergies, and have targeted $200M in cost savings in the first year after closing. NXP expects it to be accretive to EPS and free cash flow.
- Previously: NXP +6%, Freescale +5.5%; U.S. clears NXP's RF amplifier unit sale (Nov. 24 2015)
- Previously: NXP rallies following FBR Top Pick call, takes Freescale with it (Nov. 18 2015)
Nov. 24, 2015, 10:35 AM
- The Committee on Foreign Investment in the United States (CFIUS) has signed off on the $1.8B sale of NXP's (NASDAQ:NXPI) base station RF amplifier unit to China's JAC Capital.
- The sale, announced in May, is now expected to close on Dec. 7. It's meant to address antitrust concerns about NXP and Freescale's (NYSE:FSL) combined base station amplifier share following their planned merger.
- NXP and Freescale have jumped in response to the news. The companies are still targeting a 2H15 close for the merger; EU regulators approved it in September.
Sep. 17, 2015, 1:10 PM
- As expected, the EU has signed off on NXP's (NXPI +0.6%) pending cash/stock merger with Freescale (FSL +0.6%). Shares of both companies have risen slightly in response.
- Regulators note the $1.8B sale of NXP's base station power amplifier unit to China's JAC Capital addresses antitrust concerns related to NXP/Freescale's combined base station amplifier share. The deal will still create a huge player in the microcontroller market - Gartner estimates Freescale and NXP were the market's #2 and #5 players in 2014 - but plenty of competition exists.
Jul. 2, 2015, 2:05 PM
- As expected, NXP (NXPI -0.1%) and Freescale (FSL +0.2%) shareholders have signed off on the companies' cash/stock merger. In addition, NXP has added Glen Capital Partners' Greg Summe and Permira Advisers partner Peter Smitham to the board, effective as of the merger's closing.
- NXP/Freescale still expect the deal to close in 2H15. As previously announced, Freescale shareholders will receive $6.25 in cash and 0.35 NXP shares for each share they own - at current levels, that spells a payout of $40.58/share.
- In May, NXP reached a $1.8B deal to sell its RF Power unit to China's JAC Capital, thus appeasing regulators worried about NXP/Freescale's combined base station power amplifier share.
May 28, 2015, 6:18 PM
- Continuing a string of chip asset purchases by Chinese firms, Beijing's JAC Capital is buying NXP's (NASDAQ:NXPI) RF Power unit (makes base station power amplifiers) for $1.8B in cash. The deal is expected to close in 2H15.
- NXP will use the proceeds to help pay for the $2B cash portion of its pending acquisition of Freescale (NYSE:FSL). With Freescale also a major player in the base station amplifier market, NXP had previously announced it would sell its RF unit to keep regulators happy.
- Pac Crest (Overweight) notes JAC is paying ~4x sales (in-line with peer valuations), and that the deal price is towards the high end of the $1B-$2B range estimated by the firm. It sees a $0.40 dilutive impact to 2016 EPS. Bernstein (Outperform) was only expecting a sale to reap $500M-$1B.
- NXP and Freescale both closed up fractionally today following the announcement. They rallied yesterday with the help of Broadcom/Avago merger reports (confirmed this morning).
Mar. 4, 2015, 4:17 PM
- Avago (NASDAQ:AVGO) held "advanced talks" to buy microcontroller/network processor/base station amplifier maker Freescale (NYSE:FSL) before the chipmaker agreed to a $16.7B deal with NXP (NASDAQ:NXPI), Reuters reports.
- Avago reportedly got cold feet after Freescale's shares surged on an NY Post M&A report last month. However, sources state the company is "still looking for an acquisition that could be transformative."
- Over the last 15 months, Avago has struck a $6.6B deal to buy LSI (it later sold parts of LSI to Seagate and Intel), a $309M deal to buy PLX Technology, and (most recently) a $609M deal to buy Emulex, expanding into a number of enterprise hardware markets along the way.
- $31B worth of chip industry M&A deals took place last year, as chipmakers large and small try to reap cost and product synergies by merging with peers.
- Avago rose 0.9% today to $129.40, leaving it close to Monday's all-time high of $130.87.
Mar. 1, 2015, 9:56 PM
- Shortly after Reuters reported a deal was close, NXP (NASDAQ:NXPI) has announced it's buying Freescale (NYSE:FSL) for $6.25/share in cash and 0.35 NXP shares for each Freescale share owned.
- Based on NXP's Friday's close, the deal has a value of $36.14/share, nearly even with Freescale's Friday close. It has an equity value of $11.8B, and an enterprise value of $16.7B after factoring Freescale's net debt.
- Freescale shareholders will own 32% of the post-merger company. NXP will pay for the deal with $1B in cash on hand, $1B in new debt, and 115M shares. It's expected to close in 2H15.
- The companies predict $200M/year in cost savings in the first year after closing, and $500M/year eventually. They assert the post-merger company will be "the market leader in automotive semiconductor solutions and the market leader in general-purpose microcontroller (MCU) products." NXP promises the acquisition will be accretive to both EPS and free cash flow.
Mar. 1, 2015, 7:45 PM
- NXP (NASDAQ:NXPI) is close to buying fellow microcontroller vendor Freescale (NYSE:FSL) for a slight premium to Freescale's current ($11.1B) market cap, two sources tell Reuters. The deal would be the biggest in the chip industry's 18-month-long consolidation wave, creating a company with a ~$32B valuation (~$40B after debt) and expected 2015 sales of $12.2B.
- Two weeks ago, Freescale's shares jumper on reports it's exploring a sale; they've more than doubled from their October lows. In addition to making NXP a top player in the fragmented microcontroller market, acquiring Freescale would give NXP sizable network processor, analog/sensor IC, and RF power amplifier businesses.
- Freescale's network processor and amplifier ops have strong 4G base station exposure, while its microcontroller business depends heavily on auto and industrial sales. The company has relatively little consumer hardware exposure.
- Freescale currently trades for 17x 2015E EPS, and is expected by the Street to post 5% 2015 revenue growth. NXP trades for 15x 2015E EPS, and is expected to post 11% revenue growth. If recent deals are any sign, the companies will argue a merger can deliver major cost synergies.
- Update: NXP and Freescale have officially announced the deal.
Nov. 26, 2012, 7:56 AMA fund backed by the Japanese government is set to pay $2.2B to buy 2/3 of chipmaker Renesas (RNECY.PK) from current owners Mitsubishi, NEC, and Hitachi, a source tells the Nikkei. Renesas, which rose 16.6% in Tokyo on the report, would reportedly shutter factories and cut as many as 5K jobs as part of the deal. Renesas is the top player in the microcontroller market, where it competes with Microchip, Freescale, STMicroelectronics, and others. | Nov. 26, 2012, 7:56 AM
May 2, 2012, 2:02 PMMicrochip (MCHP -0.7%) is only off slightly following its deal to acquire fellow microcontroller vendor Standard Microsystems (SMSC +38.4%). Likely helping is Microchip's forecast the deal will be accretive in its first full quarter after completion. Capstone's Jeff Schreiner thinks Microchip may be trying to strengthen its position in the growing automotive microcontroller market. Rivals Atmel (ATML +1.6%) and Freescale (FSL +1.8%) are rallying a little. | May 2, 2012, 2:02 PM
Sep. 12, 2011, 7:33 AM
Broadcom (BRCM) agrees to buy NetLogic Microsystems (NETL) for $3.7B in a definitive merger agreement expected to close in the first half of 2012. The firm calls the deal a "strategic fit" that should deliver financial results. Rivals in the space potentially seeing interest: LSI, CAVM, MRVL, VTSS, FSL, PMCS, AMCC.| Sep. 12, 2011, 7:33 AM