STMicroelectronics and NXP Merge Their Wireless Businesses
NXP Semiconductor and STMicroelectronics have announced plans to combine their wireless operations to form a joint-venture company. The new organization will combine key design, sales and marketing, and back-end manufacturing assets from both companies into a streamlined worldwide joint venture that will rely on its parent companies and foundries for wafer fabrication services. The JV will also integrate the Silicon Laboratories' wireless and GloNav's GPS operations recently acquired by NXP.
"The strength of this venture is its excellent relationships with key customers, as well as the complementary IP and product portfolios transferred from ST and NXP that create a rich and broad offering with the capability to deliver leading-edge innovations to the market," said Carlo Bozotti, President and CEO of STMicroelectronics. "The JV'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."
STMicroelectronics will take an 80% stake in the joint venture, while NXP will receive $1.55 billion from ST, including a control premium, to be funded from outstanding cash. The parents have also agreed on a future exit mechanism for NXP's ongoing 20% stake, which involves put and call options, exercisable beginning 3 years from the formation of the JV.
The new company will be incorporated in the Netherlands and headquartered in Switzerland with approximately 9,000 employees worldwide.
The parent companies expect over $250 million in annual cost synergies from the JV by 2011.
Commenting on the impact to NXP, Frans van Houten said, "This deal transforms the portfolio of NXP and strengthens our cash position. We will continue to pursue building leadership positions through innovation and investment in our remaining focus areas: Multimarket Semiconductors, Automotive, Identification and Home electronics."
"The wireless semiconductor industry requires consolidation," said Jean-Francois Baril, senior vice president of sourcing and procurement with Nokia. "We welcome the emergence of this joint venture creating a strong player serving the top mobile phone manufacturers, understanding the needs of these customers and providing the required speed of innovation."
Posted to the site on 10th April 2008
