NXP Semiconductors N.V. of Eindhoven, The Netherlands has agreed to sell its RF Power business for $1.8bn to Jianguang Asset Management Co Ltd (JAC Capital, a subsidiary of China state-owned investment company JIC Capital). NXP's RF Power business is said to be one of the market leaders in high-performance RF power amplifiers primarily focused on the cellular base-station market, but with potential future growth applications in industrial lighting, next-generation cooking and automotive electronic ignition systems.
"The creation of a new company focused on the RF power amplifier market is a groundbreaking transaction for JAC Capital," says NXP's CEO Richard Clemmer. "Although we would have expected a higher valuation in a regular disposal, JAC Capital's ability to support continued growth and development of the business and its ability to sign and close a transaction rapidly was a key factor in enabling the best outcome for our customers and shareholders, as well as supporting the closure of the merger with Freescale Semiconductor [announced in March]," he adds.
"We will keep on increasing investment in R&D, manufacturing and customer service of the new company to strengthen its market position," says Brighten Li, chairman of JAC Capital Investment Evaluation Committee. "JAC Capital and its shareholders will also help the new company to maintain fast and stable growth through our network of worldwide financial institutions, industrial leaders and JAC Capital's management team with many years of experience in the semiconductor and telecom industry," he adds.
Under the agreement, the entire scope of the NXP RF Power business and about 2000 NXP staff who are primarily engaged globally in the RF Power business (including its entire management team) are to be transferred to an independent company incorporated in The Netherlands, which will be 100% acquired by JAC Capital upon closing of the transaction. Additionally, all relevant patents and intellectual property associated with the RF Power business will be transferred in the sale, as well the NXP back-end manufacturing operation in the Philippines that is focused on advanced package, test & assembly of RF Power products.
The transaction is subject to review and approval by the US Federal Trade Commission, the European Commission, MOFCOM (China's Ministry of Commerce) and other agencies in connection with their review of NXP's proposed $11.8bn acquisition of Freescale Semiconductor Ltd of Austin, TX, USA.
NXP and JAC Capital expect the sale to close in second-half 2015, pending required regulatory approval and employee representative consultations. NXP anticipates the sale of its RF Power business to be dilutive to earnings on a stand-alone basis in fourth-quarter 2015 and 2016. Proceeds from the sale will be used to partly to fund NXP's previously announced acquisition of Freescale Semiconductor (creating a company worth more than $30bn).
