Freescale Semiconductor Buyout?

Alchemist253 writes "The New York Times is running an article about a possible leveraged buyout of speciality chipmaker Freescale Semiconductor. Freescale currently makes a variety of embedded processors, microcontrollers, and memory, but is probably best known to the Slashdot crowd as the Motorola spinoff that supplied Apple its PowerPC chips before the shift over to an Intel architecture. From the article, "A consortium of investment firms was near a deal late last night to acquire Freescale Semiconductor... for more than $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 $11.3 billion sale of SunGard Data Systems last year.""

Re:Leveraged Buyout

[Ancient_Hacker]

A leveraged buyout is where one group of idiots with the gift of gab convinces another group of idiots with more money than sense, that the first group can better manage a company currently being run by a third group of idiots.

It's particularly silly in this case, as Motorola/Freescale has been often held up (perhaps even partially correctly) as an example of really good management. It's hard to stay in business for 50+ years with bad management.

The ideal case would be where the company *is* being run by clueless types. Or managers that emphasize long-term results versus quick cashouts. In those cases the blabby idiotsd can run the company into the ground and get lots of cash for a few years at least until all the cash cows have been milked dry.

Re:Borrow Money to Buyout a Company

[oscarmv]

In fact Freescale is a major player in the embedded processor and other specialized processor markets, and even in the heyday of its relationship with apple, the percent of business that represented was a drop in the bucket.

If you want to figure that one out, start checking what CPU your router is using, or your car, or a gazillion of those things nowadays that happen to use a CPU even if it doesn't boot in a GUI OS nor is used plugged to keyboard and monitor.

Re:Borrow Money to Buyout a Company

[Otter]

1) Typically LBO purchasers are getting their money either from bonds or from a pool of private equity, not from a bank loan.

2) Again typically, the plan is to sell off unproductive parts of the company, cut costs, or increase value with some other short-term plan.

3) If there were some obvious decline facing Freescale, it would already be priced into the stock.

4) As someone else has pointed out, this is a huge company that isn't a familiar name only because it doesn't make branded consumer products.

Re:Borrow Money to Buyout a Company

[nelsonal]

In regard to point 1, it wouldn't be an LBO (just an offer or BO) if some of the money weren't coming from loans. Most of the time the banks require a decent portion of the money to be invested by the fund but will loan a large amount of the transaction.