Freescale Semiconductor, Inc. (NYSE: FSL) (NYSE: FSL.B), a global leader in the design and manufacture of embedded semiconductors for wireless, networking, automotive, consumer and industrial markets, announced today that it has entered into a definitive merger agreement to be acquired by a private equity consortium in a transaction with a total equity value of $17.6 billion. The consortium is led by The Blackstone Group, and includes The Carlyle Group, Permira Funds and Texas Pacific Group.
Under the terms of the merger agreement, the consortium will acquire all of the outstanding Class A and Class B shares of Freescale for $40 per share in cash, representing a premium of approximately 36% over Freescale’s average closing share price during the 30 trading days ended September 8, 2006. The company first acknowledged it was in discussions with third parties regarding a possible transaction on September 11, 2006.
The board of directors of Freescale has unanimously approved the merger agreement and resolved to recommend that Freescale’s stockholders adopt the agreement.
There is no financing condition to the obligations of the private equity consortium to consummate the transaction, and equity and debt commitments for the full amount of the merger consideration have been received. It is currently anticipated that substantially all of the company’s outstanding Notes will either be tendered for or repaid.
The merger is subject to customary conditions to closing, including the affirmative vote of Freescale stockholders and requisite antitrust approvals. The merger agreement contains a provision under which Freescale may solicit alternative proposals from third parties during the next 50 calendar days. In addition, Freescale may, at any time, subject to the terms of the merger agreement, respond to unsolicited proposals. If the company accepts a superior proposal, a break-up fee would be payable by the company. There can be no assurance of any alternative proposal.
Goldman, Sachs & Co. serves as financial advisor to Freescale and provided a fairness opinion in connection with the transaction. Wilson Sonsini Goodrich & Rosati Professional Corporation serves as legal adviser to Freescale in connection with the transaction.
Credit Suisse Securities (USA) LLC, Citigroup Corporate and Investment Banking and Blackstone Corporate Advisory Services act as financial advisors to the private equity consortium. Skadden, Arps, Slate, Meagher & Flom LLP serves as legal adviser to the private equity consortium in connection with the transaction.
About Freescale Semiconductor
Freescale Semiconductor, Inc. (NYSE:FSL) (NYSE:FSL.B) is a global leader in the design and manufacture of embedded semiconductors for the automotive, consumer, industrial, networking and wireless markets. Freescale became a publicly traded company in July 2004. The company is based in Austin, Texas, and has design, research and development, manufacturing or sales operations in more than 30 countries. Freescale, a member of the S&P 500(R), is one of the world’s largest semiconductor companies with 2005 sales of $5.8 billion (USD).
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Blackstone, a global private investment and advisory firm, was founded in 1985. The firm has raised a total of approximately $62 billion for alternative asset investing since its formation of which roughly $30 billion has been for private equity investing. Blackstone’s private equity group has over 60 experienced professionals with broad sector and specialist semi-conductor expertise. Blackstone’s other core businesses include Private Real Estate Investing, Corporate Debt Investing, Hedge Funds, Mutual Fund Management, Private Placement, Marketable Alternative Asset Management, and Investment Banking Advisory Services.
About The Carlyle Group
The Carlyle Group is a global private equity firm with $44.3 billion under management. Carlyle invests in buyouts, venture & growth capital, real estate and leveraged finance in Asia, Europe and North America, focusing on telecommunications & media, aerospace & defense, automotive & transportation, business services, consumer & retail, energy & power, healthcare, industrial, and technology. Since 1987, the firm has invested $22.4 billion of equity in 528 transactions for a total purchase price of $94.6 billion. The Carlyle Group employs more than 680 people in 16 countries.
Permira is a leading international Private Equity specialist. As an independent business, Permira is owned and controlled by its partners. The firm’s team of over 100 professionals, based in Frankfurt, London, Madrid, Milan, New York, Paris, Stockholm and Tokyo, advises the Permira Funds with a total committed capital of more than Euro 20 billion. Since 1985, the Permira Funds have completed over 280 private equity transactions. During the last year, the Permira Funds have committed to ten transactions with a combined transaction value of over Euro 27 billion. Recent deals involving the Permira Funds have included the acquisitions of Nordic telecoms firm (TDC) – the largest private equity transaction ever undertaken in Europe – pan-European media business (SBS Broadcasting), leading UK roadside recovery and insurance firm (the AA), and (Intelsat), the largest global satellite business.
About Texas Pacific Group
Texas Pacific Group is a private investment partnership that was founded in 1992 and currently has more than $30 billion of assets under management. Texas Pacific Group invests in world-class franchises across a range of industries, including technology (Lenovo, MEMC, ON Semiconductor, Seagate, SunGard), industrials (Altivity Packaging, British Vita, Grohe, Kraton Polymers, Texas Genco), retail/consumer (Debenhams, Ducati, J. Crew, Neiman Marcus, Petco), airlines (America West, Continental), media and communications (Findexa, MGM, TIM Hellas), financial services (Endurance Specialty Holdings, Fidelity National Information Services, LPL Financial Services) and healthcare (IASIS Healthcare, Oxford Health Plans, Quintiles Transnational), among others.