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Investing.com -- NXP Semiconductors NV (O:NXPI) has agreed to divest its RF power amplifier assets to a Chinese private equity firm as a condition for acquiring Freescale Semiconductor Ltd (N:FSL), officials from the U.S. Federal Trade Commission said Wednesday.
With the agreement, the Netherlands-based semiconductor company settled charges with the FTC that its $11.8 billion proposed acquisition of Freescale violated U.S. federal anticompetitive standards. NXP Semiconductors announced the proposed merger in March, a deal which it expects to close early next month. The FTC's proposed consent order preserves competition by requiring NXP to divest all of its assets used for the manufacturing, research and development of RF power amplifiers to Jianguang Asset Management Co., a China state-owned private equity firm in Beijing.
As part of the deal, the firm will receive a manufacturing building in the Philippines, a laboratory in the Netherlands along with the patents and technologies related to the power business. The announcement came one day after the Committee on Foreign Investment in the United States (CFIUS) approved the divestiture.
In early-March, NXP announced the acquisition of the Austin, Texas based Freescale Semiconductor in a multi-billion deal that established the top automotive semiconductor supplier and top general purpose MCU supplier in the U.S. In the first year after completing the transaction, NXP said it expects to achieve cost savings of $200 million, with the potential for $500 million of annual cost synergies.
"The combination of NXP and Freescale creates an industry powerhouse focused on the high growth opportunities in the Smarter World." NXP CEO Richard Clemmer said at the time. "We fully expect to continue to significantly out-grow the overall market, drive world-class profitability and generate even more cash, which taken together will maximize value for both Freescale and NXP shareholders,”
Under the agreement, Freescale shareholders will receive $6.25 in cash and 0.35 of an NXP share for each Freescale common share. Once the deal is completed, Freescale shareholders will own roughly 32% of the combined company.
Shares in NXP Semiconductors were up 0.30 or 0.36% to 84.78 in after-hours trading, after closing the regular session up more than 1.35%.