By Eric Auchard
FRANKFURT (Reuters) – NXP has closed its nearly $12 billion deal to acquire Freescale, doubling the proportion of auto-related revenue to 40 percent to create the world's top maker of automotive electronics, the company said on Monday. Automotive unit Chief Executive Kurt Sievers said in an interview that the deal would allow NXP to assemble a range of discreet automotive applications into more complete systems running on top of Freescale processors. It propels NXP into new application areas in cars including powertrain, safety & body electronics, Sievers said, building on its existing leading positions in audio infotainment, security & vehicle networks. It aims to build security into key car systems to guard against hackers. The merger moreover bolsters NXP's position in other fast-growing chip markets, including wearable devices & health monitors, for example, while capitalizing on the company's strengths in security & payments.
The cash & stock deal, excluding debt, valued Freescale at $11.86 billion, based NXP's closing price on Friday. Freescale shareholders will own approximately one-third of the combined company.
One new product category NXP expects to develop using Freescale technology is a single integrated radar chip that it is betting will replace current ultrasonic radar systems used in advanced vehicle safety systems, posing a challenge to automotive chip specialist Elmos' existing ultrasonic chips.
A second product category will be multimedia processors that can allow NXP to expand its strong position in audio information systems into other areas of infotainment including video display dashboards.
NXP grew out of Dutch consumer electronics giant Philips, co-developer of CDs & DVDs, & moreover had historic roots in Silicon Valley. Freescale was spun out of cellphone & walkie-talkie pioneer Motorola.
Faltering demand in computer & phone markets, once semiconductor industry mainstays, have fueled a year-long merger wave as firms look to formerly unloved areas like auto electronics for sales growth.
(Editing by James Regan)