15 February 2011

Freescale looks to raise $1billion to pay down debt

When private equity investors acquired NXP and Freescale a few years ago, the cost of the deals was placed on the acquired company's balance sheet. In that way, NXP and Freescale paid for the privilege of being bought.
This approach worked in good times; unfortunately, the timing of the deals was bad.

When the global economy collapsed shortly afterwards, the debts came close to finishing both companies.

Now Freescale is launching an IPO, with the aim of raising $1billion to pay down debt. That's good for Freescale, certainly. But it's also good for the semiconductor industry as it shows that investors are back in action. Because, for a couple of years, investing in semiconductor companies has been as attractive as assuming toxic banking debts.

Graham Pitcher

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Do you have any comments about this article?

Re. the private equity mess: do you think it's possible to re-shape our society/economy so that it's not organised around finding new ways to make a profit from someone else's work?

If so, what might work?
If not, what would make it impossible?

I'm interested in people's thoughts about this.

Comment Karl Lam, 15/02/2011
Karl, I don't know what the answer is, but I think it will be a bit easier once we're completely out of the current economic downturn.

While this is good news for Freescale, is it, as Graham Pitcher says, "good for the semiconductor industry as it shows that investors are back in action." ?

On the back of the Freescale IPO, I can't really see a sudden influx of new investors fighting to invest in other semiconductor companies.

Comment NanoNorman, 15/02/2011

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