NXP, of course, was the semiconductor operation of Philips until acquired – also in 2006 – by a consortium led by KKR for €8.3bn. Freescale followed NXP into private ownership three months later for $17.6bn – precisely the same amount that NXP will pay Freescale shareholders when the $4.9bn of debt it will assume is added in.
Timing is everything and both groups of investors may well have kept the cash under their respective mattresses if they knew the semiconductor industry was going to slump within a year or so of their deals. Troubled by the debt loaded onto their balance sheets to finance the deals and by depressed demand, both companies struggled for the first few years and both were seen to be in 'intensive care'.
Speaking exclusively to New Electronics recently, Freescale president Gregg Lowe said: "There's still work to be done, but the debt isn't the millstone it was."
So, what next?
We know Rick Clemmer will be the boss of the new organisation, of which Freescale will constitute about one third. Beyond that, it's a case of wait and see.
The announcement was full of terms such as 'shareholder value' and 'synergies' and NXP says it can see a way to save $500million a year. With mergers such as this, the expectation is that such terms are euphemisms for staff cuts, rationalisation of the portfolio or both.
