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The transaction brought NXP and Freescale together under the NXP name, but its headline value was not the amount of cash paid to Freescale shareholders.
What did the $40 billion figure mean?
When NXP Semiconductors and Freescale Semiconductor announced their definitive merger agreement on March 2, 2015, NXP described the proposed combined company as having an enterprise value of just over $40 billion. Enterprise value is a measure of a business’s total value that takes account of financing as well as equity; it is not the same as the value of shareholders’ stock or a cash purchase price.
| Measure | Announced figure | What it referred to |
|---|---|---|
| Combined enterprise value | Just over $40 billion | NXP’s stated value for the combined company. |
| Freescale equity value | Approximately $11.8 billion | Implied value of Freescale shares under the announced terms. |
| Freescale enterprise value | Approximately $16.7 billion | Implied Freescale enterprise value, calculated using NXP’s February 27, 2015 closing share price. |
The figures differ because they describe different things: the $40 billion-plus figure covered the combined business, while $11.8 billion was the implied value of Freescale’s equity. NXP’s announcement and transaction filings gave the $11.8 billion and $16.7 billion estimates.
How was the deal structured?
For each Freescale common share, a shareholder was to receive a mix of cash and NXP stock:
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- Cash: $6.25 per Freescale share.
- NXP shares: 0.3521 of an NXP ordinary share per Freescale share.
NXP planned to fund the cash portion with $1 billion of balance-sheet cash and $1 billion of new debt, and to issue about 115 million new NXP shares. Freescale shareholders were expected to own roughly 32% of the combined company after the transaction.
Why did NXP want to acquire Freescale?
NXP presented the merger as a way to strengthen its position in automotive semiconductors and general-purpose microcontrollers (MCUs), while combining capabilities in connectivity, processing and security. At announcement, management projected combined annual revenue above $10 billion and described the combination as a route to leadership in automotive semiconductors and general-purpose MCUs.
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NXP also forecast $200 million in cost savings in the first year and a path to $500 million in annual cost synergies. These were management expectations announced in 2015, not verified results of the completed merger.
What approvals were needed, and when did the merger close?
The deal required shareholder approval and regulatory clearances. NXP reported that the European, Korean and Japanese clearances had been obtained before it announced U.S. Federal Trade Commission approval on November 25, 2015. On November 27, NXP said China’s Ministry of Commerce (MOFCOM) had granted final approval. NXP also identified the sale of its RF Power business to Jianguang Asset Management (JAC Capital) as a condition of completing the merger.
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Repair common Windows errors and clear accumulated junk for a smoother, more stable PC - no reinstall needed.Free scan · no reinstallThe merger closed on December 7, 2015. The surviving company continued as NXP Semiconductors and described itself as a mixed-signal semiconductor leader, with combined revenue above $10 billion and leadership positions in automotive semiconductors and general-purpose MCU products.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What did NXP later disclose about the merger’s costs?
In its 2016 report of full-year 2015 results, NXP said the merger contributed approximately one month of Freescale revenue. It also disclosed a $239 million restructuring charge and $49 million in stock-based compensation charges related to employees terminated as a result of the merger. Those accounting charges are distinct from the cost-savings and synergy targets management had projected when announcing the deal.
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