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Proposed buyout of Freescale nearing completion


A consortium of investment firms was near a deal on Sunday night to acquire Freescale Semiconductor, a former unit of Motorola, for more than US$16 billion, according to people briefed on the negotiations.

The deal, if completed, would be the largest leveraged buyout ever in the technology sector, surpassing the US$11.3 billion sale of SunGard Data Systems last year.

The talks illustrate the increased appetite of private equity firms for the technology industry, a sector shunned for years by financiers because it was considered too volatile. But as technology companies have matured and private equity firms have begun to look for companies that are not simply stable, but also growing, more and more deals are taking place.

The heart of Freescale's business is in making specialized, or "embedded," chips that provide intelligence for things as varied as automotive engines and cellphones.

The consortium of investors in talks to acquire Freescale include Texas Pacific Group, Blackstone Group and Permira, these people said. It is possible that the Carlyle Group and Bain Capital could also join the group.

People involved in the discussions cautioned that the talks could still collapse or that an interloper could emerge with a higher bid.

Indeed, on Sunday afternoon, Kohlberg Kravis Roberts & Co and Silver Lake Partners submitted an 11th hour offer for Freescale, but it appears that the bid may have been too low and too late, these people said. Of course, it is possible that the group could return with a higher offer. Exact details of the bids could not be learned.

A spokeswoman for Freescale did not return a call seeking comment. Spokesmen for the consortium either declined to comment or could not be reached.

The semiconductor industry appears to be in a deal frenzy.

Last month, Philips Electronics agreed to sell 80 percent of its semiconductor division to a group of private equity firms -- Kohlberg Kravis Roberts & Co, Silver Lake Partners and AlpInvest Partners -- for US$4.4 billion.

Freescale, which was spun out of Motorola in 2004, is now the world's 10th largest chipmaker with revenues of US$5.8 billion last year.

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