Freescale Agrees to $17.6B Buyout

By Ann Steffora Mutschler -- Electronic News, 9/15/2006

Ending a week that began with acknowledgement that it was in discussions with third parties regarding a possible leveraged buyout, Austin-based Freescale Semiconductor Inc. said late today that it has entered into a definitive merger agreement to be acquired by a private equity consortium for $17.6 billion.

Tuesday, reports had said two private equity groups were engaged in a bidding war that on that day had surpassed $16 billion.

The consortium with the winning bid 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. This represents a premium of approximately 36 percent over Freescale’s average closing share price during the 30 trading days ended September 8.

According to a statement from the company, Freescale’s board of directors has unanimously approved the merger agreement and resolved to recommend that Freescale’s stockholders adopt the agreement as well.

Further, 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. Freescale expects that substantially all of its 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.