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© mikael damkier dreamstime.com Components | March 02, 2015

NXP to acquire Freescale in a USD 11.8 billion deal

NXP and Freescale have entered into a definitive agreement under which NXP will merge with Freescale in a deal which values the combined enterprise at a whopping USD 40 billion.
"Today's announcement is a transformative step in our objective to become the industry leader in high performance mixed signal solutions. 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," said Richard Clemmer, NXP Chief Executive Officer. Richard Clemmer will continue to be 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. 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," said Gregg Lowe, Freescale Semiconductor President and Chief Executive Officer.

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

The purchase price implies a total equity value for Freescale of approximately USD 11.8 billion and a total enterprise value of approximately USD 16.7 billion including Freescale's net debt.

The transaction is expected to close in the second half of calendar 2015. NXP intends to fund the transaction with USD 1.0 billion of cash from its balance sheet, USD 1.0 billion of new debt and approximately 115 million NXP ordinary shares. Post transaction, Freescale shareholders will own approximately 32 percent of the combined company.
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