Freescale Readies for $2.6B IPO
Online staff -- EDN, June 21, 2004
Freescale today announced the terms of its spin-off -- an IPO that could be worth $2.6 billion.
The Motorola SPS-launch company said it plans to offer 121 million class A common stock shares, priced between $17.50 and $19.50.
Underwriters will also have the option to purchase an additional 18.2 million shares to meet demand, according to a filing with the Securities and Exchange Commission (SEC).
Motorola Inc. will further own Freescale's class B stock, representing 92 percent of the total voting power at the company and 69.6 percent of Freescale's outstanding stock.
Freescale said in the filing that, at conclusion, it expects the stock offering to be worth $2.1 billion to $2.5 billion.
The company also plans to issue $1.25 billion in debt and will distribute $1.5 billion of total proceeds to Motorola, leaving $750 million in net cash and cash equivalents. In addition, the SEC document said that net proceeds of $322 million from the overallotment, if exercised, will be distributed to Motorola.
The fledging company also gave estimates for its Q2, ending July 3, with expected sales to be flat sequentially. Freescale expects Q2 sales to range between $1.4 and $1.5 billion, compared to Q1's $1.4 billion. Gross margin is expected to be 37 percent, compared to 36 percent last quarter. Costs related to the separation from Motorola are expected to be approximately $40 million for the quarter.
Freescale will trade on the New York Stock Exchange under "FSL."
