Freescale, one of the world's largest device-oriented semiconductor manufacturers, is being acquired by a private equity consortium in a transaction valued at $17.6 billion. The company was formed in 2004 when Motorola spun out its semiconductor division, and is a leading supplier of silicon to Motorola and other cellphone manufacturers.

The deal consummates rumors that emerged last week, after Freescale confirmed acquisition talks on Sept. 11. Subsequently, Freescale's stock price shot from about $27 to about $37 per share.

The consortium is led by The Blackstone Group, and includes The Carlyle Group, Permira Funds, and Texas Pacific Group. According to the terms of the deal, the consortium will buy all outstanding Class A and B shares for $40 each — a figure about 36 percent higher than a 30-day average ending Sep. 8.

The merger agreement passed Freescale's board unanimously, and has been called “definitive” in a company statement. The agreement must now pass a shareholder vote, and meet with regulatory approval.

Additionally, the agreement allows Freescale 50 days to consider other offers, both solicited and unsolicited, paying a “breakup fee” should another buyer be chosen.

Freescale ranked 368th on the Fortune 500 last year, with sales of $5.8B. Another well-known semi-conductor vendor, AMD, ranked 367th.

Freescale spun out from Motorola's SPS (semiconductors and professional services) division in Feb. of 2004, calling itself at the time the “#1 embedded chip company.”

Freescale's chip products range from extremely low-power 68K-based “ColdFire” microcontrollers to powerful multi-core PowerPC-based processors popular in telecommunications infrastructure.

Freescale also offers a line of ARM-based “DragonBall” and “i.MX” applications processors for phones and other mobile devices, as well as “PowerQUICC” SoCs that combine PowerPC processors with microcode-programmable network and storage acceleration engines.

Additionally, Freescale has a Developer Technology Division (“Dev-tech”) that resulted from the re-integration of Metrowerks, previously a wholly owned Motorola subsidiary.

 
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