Freescale agrees to $11.8 bln Dutch takeover

Laura Mandaro | USA TODAY

Freescale Semiconductor, which makes chips used in cars, has agreed to a $11.8 billion cash and stock take-over by Dutch chipmaker NXP Semiconductors.

Freescale (FSL) shareholders will receive $6.25 in cash and 0.3521 of an NXP (NXPI) share for each Freescale share they own. Based on NXP's Friday closing price of $84.90 and Freescale's close of $36.11, the deal would give Freescale shareholders $36.14 a share -- meaning essentially no premium to Freescale's shares.

Freescale shares rallied nearly 12% on Monday as the Nasdaq Composite crossed 5,000 for the first time since 2000. NXP shares surged 17%. Also Monday, H-P said it would buy Aruba Networks for $2.7 billion.

After the transaction, Freescale shareholders will own about 32% of the new company. NXP expects $200 million of cost savings in the first full year after the merger is completed, and that should improve to $500 million a year annually.

Freescale, a spinoff by Motorola, was taken private in 2006 and is 64% owned by private equity firms including the Carlyle Group and TPG Capital Management. It went public again in 2011.

It's been carving out a market in chips servicing next-generation appliances and the so-called Internet of Things. The takeover was announced late Sunday in the U.S., just as Austin, Tex.-based Freescale was announcing at the Mobile World Congress in Barcelona a new vision processor that could "automate and 'co-pilot' a self-aware car."

The new company, which will be run by NXP's CEO Richard Clemmer, will become the market leader in automative semiconductors and general purpose microcontroller products, NXP said.

Including Freescale's debt, the deal is worth $16.7 billion. It's expected to close in the second half of 2015. NXP, which trades on the Nasdaq Stock Market, plans to fund the deal with $1 billion in cash, $1 billion in new debt and 115 million NXP ordinary shares.

Freescale has surged 43% this year, while NXP shares were up 11%.