Freescale bidding war declared

Hot chips, cold cash

By Kelly Fiveash • Get more from this author

Posted in Financial News, 12th September 2006 10:33 GMT

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Computer chip maker Freescale Semiconductor, a spin-off of Motorola, has announced that it is in talks with several possible investors.

According to reports the company, which makes chips used in mobile phones, computer networks and automotive markets, could attract a $16bn price tag. If acquired this could be the largest leveraged buyout deal of its kind in the technology sector.

On Friday Freescale's shares closed at $30.75. Its closing share price yesterday was $37.06, giving it a market capitalization of $15bn. Freescale only split off from Motorola in 2004, with a share price of $13 per share.

Bidders have not been identified though sources suggest that a private equity consortium made up of Blackstone Group, Permira Advisors, Texas Pacific Group and Carlyle Group is looking to invest.

Talks have apparently been going on for several months between the Blackstone-Permira group and Freescale.

A rival consortium consisting of Silver Lake Partners, Bain Capital, Kohlberg Kravis Roberts & Co, and Apax Partners has also reportedly bid for the semiconductor business, putting in a higher offer last weekend.

The Kohlberg-Silver Lake group bought Philips Electronics' semiconductor unit last month and could be looking to merge it with Freescale.

Freescale is yet to comment further on any "possible business transaction" but it's a deal that highlights the changing fortunes of the semiconductor sector, which is now ripe for private equity.®

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