NXP Semiconductors (NXPI) Offers Concessions to EU for Freescale Takeover
PUBLISHED ON: Aug 4, 2015
Shares of NXP Semiconductors N.V. (NXPI) were down -4.99 or -5.09 percent in Tuesday's premarket trading after news that the company had offered concessions to the European Union in a bid to secure antitrust approval for the company's planned takeover of U.S. rival Freescale Semiconductor Ltd (FSL). NXP Semi stock closed at $97.97, up +0.98 or +1.01 percent in Monday's regular trading session.
Eindhoven, the Netherlands based NXP Semiconductors is among the world's top twenty semiconductor manufacturers by sales.
NXP Semiconductors manufactures mixed signal and standard semiconductors based on its analog, RF, interface, security digital processing and power management technology. The semiconductors are used in a variety of "smart" applications in the automotive, lighting, and industrial and identification industries, as well as other consumer and computing applications. The company had $5.65 billion in revenue in 2014 and employs over 28,000 people.
On July 31st, NXP submitted its offer for concessions to the European Competition Authority, the same day that it requested approval from the European Union for its $11.8 billion bid for Freescale Semiconductor. NXP offered to merge with Freescale in early March of this year for a combination of cash and stock: Freescale shareholders would receive $6.25 in cash and 0.3521 shares of NXP Semiconductor stock.
The details of the concessions were not made public by the European Competition Authority according to policy; however large companies looking to merge generally sell overlapping assets to allow competition and to stave regulatory concerns. The European Commission, for its part extended its deadline for reviewing the matter to September 18th from September 4th after receiving the offer from NXP Semi.
Clearance for the merger can be done unconditionally by the EU antitrust regulator, or the regulator can demand further concessions than those proposed by the company. The regulator, if unsatisfied with the proposed concessions can demand a full investigation to allay any additional antitrust concerns.
The merger of NXP with Freescale, if approved will create a combined company worth approximately $40 billion that would be a leader in the automotive and industrial semiconductor markets. In addition to their uses in the automotive and industrial segments, NXP chips are used extensively in identification, imbedded in government passports, security cards and building identification tags.
The concessions offered this morning to the European Commission, while not disclosed appear to have put off investors in this morning's premarket trading. Nevertheless, NXP stock has recovered some of its earlier losses. Today's action and subsequent news releases will be closely watched by NXP and Freescale shareholders.
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