The semiconductor industry continues to consolidate. Some mergers are stronger than others. On March 1, 2015 it was announced that NXP and Freescale plan to combine forces. Both companies have a significant presence in automotive and microcontrollers. Following this merger the new company would be the leader in automotive semiconductors and second in MCUs. But does bigger mean better?
According to the NXP press release “Freescale shareholders will receive $6.25 in cash and 0.3521 of an NXP ordinary share for each Freescale common share held at the close of the transaction. The purchase price implies a total equity value for Freescale of approximately $11.8 billion.” If one were to include Freescale’s net debt, the total enterprise value is $16.7 billion. The transaction is expected to be completed by 2H 2015.
Both companies have comparable revenues. NXP’s gross revenues in 2014 were $5.6 billion while Freescale had $4.6 billion. The combined revenues are $10.2 billion.
