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From the News Desk
Friday, 11. April 2008
STMicroelectronics and NXP Combine Forces to Expand Product Breadth and Boost Innovation
NXP, an independent semiconductor company founded by Philips and STMicroelectronics, a solution provider for mobile products, announced their agreement to combine key wireless operations to form a joint-venture company with strong relationships with all major handset manufacturers.
According to the company, the new company will have the scale to better meet customer needs in 2G, 2.5G, 3G, multimedia, connectivity and all future wireless technologies. The combined venture will be created from successful businesses that together generated USD 3B in revenue in 2007 and will own thousands of important communication and multimedia patents.
“The Joint Venture’s strong positioning leads us to expect immediate and future top- and bottom-line synergies for the exciting new enterprise and establishes a powerful foundation to build on its parents’ 2G, 2.5G, 3G, multimedia and connectivity efforts. This combination will form the basis of the success of the new venture,” said Carlo Bozotti, President and CEO of STMicroelectronics.
In order to create a clear ownership structure, STMicroelectronics will take an 80 percent stake in the joint venture. NXP will receive USD 1.55 billion from ST, including a control premium, to be funded from outstanding cash (cash and cash equivalents balance for ST at year end 2007 were USD 3.5 billion). The parents have also agreed on a future exit mechanism for NXP’s ongoing 20 percent stake, which involves put and call options, exercisable beginning 3 years from the formation of the joint venture, at a strike price based on actual future financial results, with a 15 percent spread.
The new company will be incorporated in the Netherlands and headquartered in Switzerland with approximately 9,000 employees worldwide. A board of Directors on which Carlo Bozotti and Frans van Houten, President and CEO of NXP, will participate will govern the Joint Venture. Aiming for a closing in the third quarter of this year, the deal is subject to regulatory approvals and labor council consultations. The parent companies expect over USD 250 million in annual cost synergies from the joint venture by 2011.
According to the company, the new company will have the scale to better meet customer needs in 2G, 2.5G, 3G, multimedia, connectivity and all future wireless technologies. The combined venture will be created from successful businesses that together generated USD 3B in revenue in 2007 and will own thousands of important communication and multimedia patents.
“The Joint Venture’s strong positioning leads us to expect immediate and future top- and bottom-line synergies for the exciting new enterprise and establishes a powerful foundation to build on its parents’ 2G, 2.5G, 3G, multimedia and connectivity efforts. This combination will form the basis of the success of the new venture,” said Carlo Bozotti, President and CEO of STMicroelectronics.
In order to create a clear ownership structure, STMicroelectronics will take an 80 percent stake in the joint venture. NXP will receive USD 1.55 billion from ST, including a control premium, to be funded from outstanding cash (cash and cash equivalents balance for ST at year end 2007 were USD 3.5 billion). The parents have also agreed on a future exit mechanism for NXP’s ongoing 20 percent stake, which involves put and call options, exercisable beginning 3 years from the formation of the joint venture, at a strike price based on actual future financial results, with a 15 percent spread.
The new company will be incorporated in the Netherlands and headquartered in Switzerland with approximately 9,000 employees worldwide. A board of Directors on which Carlo Bozotti and Frans van Houten, President and CEO of NXP, will participate will govern the Joint Venture. Aiming for a closing in the third quarter of this year, the deal is subject to regulatory approvals and labor council consultations. The parent companies expect over USD 250 million in annual cost synergies from the joint venture by 2011.
