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Freescale goes to Blackstone-led group for $17.6bn

In a deal valued at $17.6bn, Texas semiconductor maker Freescale has decided to be taken private with a group including Blackstone, Carlyle, Permira and Texas Pacific, dealing a blow to a KKR-led group that recently bought the semiconductor division of Philips.

Freescale Semiconductor today announced an agreement to be taken private in a $17.6 billion (€13.9 billion) transaction led by The Blackstone Group and including The Carlyle Group, Permira Funds and Texas Pacific Group.

The Austin, Texas semiconductor maker had been the subject of a fierce competition between the Blackstone-led group and a rival group including Kohlberg Kravis Roberts, Bain Capital, Apax Partners, Silver Lake Partners and AlpInvest, who reportedly wanted to merge Freescale with the semiconductor unit of Philips Electronics, an acquisition announced just last month.

The winning consortium will pay $40 per share for Freescale, representing a 36 percent premium over the company’s average closing share during the last 30 days of trading ending September 8.

Goldman Sachs acted as advisor to Freescale, which designs and manufactures embedded semiconductors for the automotive, consumer, industrial, networking and wireless markets.

The company was listed publicly in July 2004 and has trended steadily upward since then. The share price leapt 18 percent on September 11 when Freescale acknowledged being in discussions over a possible take-private.

Freescale is a former division of Motorola, and is still the primary supplier of chips to the mobile phone maker.

Freescale is only the third-largest public-to-private deal announced this year, with the $33 billion take-private of HCA and the $22 million privatisation of Kinder Morgan more richly valued.