NXP Semiconductors NV, which last year merged with Austin's Freescale Semiconductor, is selling its standard products business to a group of Chinese investors for $2.75 billion, furthering that country’s efforts to acquire chip assets and reduce imports.
China’s Beijing Jianguang Asset Management Co. and Wise Road Capital Ltd. will be the new owners of the business, NXP said in a statement on its website. The unit, which had revenue of $1.2 billion in 2015, will transfer about 11,000 NXP employees to a new company that will be called Nexperia.
China is seeking to buy up semiconductor capabilities to strengthen its domestic industry and replace imports that have sucked almost as much cash out of the country as oil purchases. China’s push to acquire overseas expertise has faced obstacles as government regulators in the U.S. have expressed concern about the transfer of technology that could be used by the military.
NXP, based in Eindhoven, Netherlands, was expected to sell off its standard products business in the wake of the Freescale merger.
NXP said it has two focus areas for the proceeds of the sale of the division, which makes diodes, transistors and other basic parts used in cars, industrial equipment and consumer electronics.
“One is reducing overall debt at the company, and two is making acquisitions to increase the asset base,” Dan Durn, chief financial officer of NXP, said during a conference call. He said taxes on the transaction are expected to be about $450 million, meaning the net proceeds of the sale would be about $2.3 billion.
"This transaction is a positive accomplishment for all parties involved. It enables NXP to continue to focus on its High-Performance Mixed Signal business, furthering our Secure Connections for a Smarter World strategy,” Rick Clemmer, NXP's CEO, said in a written statement. “We believe the creation of Nexperia benefits our customers, as JAC Capital and Wise Road Capital will focus on global investments to enhance and support the future growth of the business.
NXP announced in March 2015 that it planned to acquire Freescale for about $12 billion. That sent ripples through the semiconductor industry, especially in Austin, where Freescale employed about 5,000 people. The deal formally closed in December.
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