NXP Semiconductors N.V. Dumps RF Unit, Forestalling Regulators

NXP Semiconductors N.V.

agreed to sell its radio frequency power business for $1.8 billion to China's state-owned Jianguang Asset Management Co. http://www.nxp.com/news/press-releases/2015/05/nxp-semiconductors-announces-agreement-to-sell-rf-power-business.html The deal heads off antitrust concerns regarding NXP's pending $11.8 billion acquisition of FreeScale Semiconductor Ltd. announced in March. http://www.nxp.com/news/press-releases/2015/03/nxp-and-freescale-announce-40-billion-merger.html Both NXP and FreeScale are market leaders in RF chips. NXP's Chief Executive Richard L. Clemmer said signing a quick deal in support of the FreeScale transaction was a "key factor" in accepting the offer. "We would have expected a higher valuation in a regular disposal," said Clemmer, who also cited JAC's ability to support further development of the RF business. NXP said proceeds from the sale will be used to help pay for the FreeScale acquisition, which it previously expected to fund with $1 billion of balance-sheet cash, $1 billion of new debt and about 115 million shares. NXP expects the sale of its RF business will reduce earnings in the fourth quarter 2015 and during 2016. The FreeScale deal, expected later to close this year, will nearly double NXP's annual revenue to more than $10 billion and make it a market leader in automotive semiconductors and in products used in the so-called Internet of Things. Shares of the Netherlands-based chipmaker changed hands recently at $111.87, up $1.16.