NXP-Freescale Merger Marks Largest Semiconductor M&A Deal

NXP-Freescale Merger Marks Largest Semiconductor M&A Deal

This IDC Flash reviews the Netherlands–based NXP Semiconductors' announcement on March 2, 2015, that it is merging with Freescale Semiconductor, based in Austin, Texas. The combined revenue of the two companies will be over $10 billion, and together, they will have a valuation of just over $40 billion, making this acquisition the largest ever M&A deal in the semiconductor industry. This transaction will be a combination of cash and NXP shares that will have a total equity value for Freescale shareholders of approximately $11.8 billion (based on NXP's closing stock price as of February 27, 2015) and a total enterprise value of approximately $16.7 billion including Freescale's net debt. The offer values Freescale at 3.6x EV/LTM sales. The transaction is expected to be accretive to NXP's earnings and free cash flow. NXP anticipates achieving cost savings of $200 million in the first full year after closing the transaction, with a clear path to $500 million of annual cost synergies. The transaction is expected to close in the second half of calendar year 2015. NXP intends to fund the transaction with $1.0 billion of cash from its balance sheet, $1.0 billion of new debt, and approximately 115 million NXP ordinary shares. Post transaction, Freescale shareholders will own approximately 32% of the combined company.

Please Note: Extended description available upon request.

In This Flash
Situation Overview
Future Outlook

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