Philips Semiconductors to Become NXP
Philips Semiconductors CEO Frans van Houten today revealed the company will move forward as NXP, marking a milestone in its 53 year history as it becomes independent from Royal Philips. The name change announcement follows an agreement between Royal Philips and Kohlberg Kravis Roberts & Co. (KKR), Bain Capital, Silver Lake Partners, Apax and AlpInvest Partners NV that will see the consortium take an 80.1% stake in the semiconductor operation with Philips retaining a 19.9% interest. NXP is Europe's second largest semiconductor company and a global top 10 player.
Derek Lidow, CEO of iSuppli said, "This largest technology leveraged buyout ever will create a real semiconductor powerhouse. Armed with its independence, and starting out as Europe's second largest semiconductor company, the management team has clearly just started re-writing the history books."
Mr. van Houten confirmed that NXP will continue its current business renewal strategy, which has been underway for 18 months and has contributed to sustained profitability and cost savings, as a strong foundation for the future.
The new shareholders support the continuation of the strategy of NXP, which is driving for leadership in five markets on which the company focuses: Automotive, Identification, Home, Mobile and Personal, and Multimarket Semiconductors. This will be achieved through investment of one billion Euro in R&D, the asset light manufacturing strategy, a strong customer focus, the enormous talent base among its 37,000 employees, and the continued Business Renewal Program.
Explaining the financial structure of the equity funding, Mr. van Houten confirmed NXP will have over 1.2 billion Euro in cash and credit reserves. This financial buffer will also enable the company to explore options for acquisitions. A center dedicated to emerging technologies has been established within NXP with close to 600 scientists joining from Philips Research and Applied Technologies, ensuring continued innovation. In total, NXP now has over 6,700 engineers in research & development. NXP will remain headquartered in Eindhoven, the Netherlands.