NXP Semiconductors CEO: Capital Structure Progress Made Freescale Deal Possible

NXP Semiconductors NV (NASDAQ: NXPI) announced Monday that it will be acquiring Texas-based Freescale Semiconductor Ltd (NYSE: FSL) in a $11.8 billion cash and stock deal, following which the shares of both companies opened higher same day, and were trading up 16.5 and 11 percent, respectively, at the time of writing.

Rick Clemmer, NXP Semiconductors CEO, executive director and president, was on CNBC following the announcement to discuss the deal.

Progress In Capital Structure Helped

On what allowed the company to strive for such a massive deal, Clemmer said, “The real opportunity is with the progress that we have made over the last few years with our capital structure, [they] gave us the ability to think about much more significant transactions to really bring together a true power house in the industry.

“And so that's what allowed us to really be able to do this.”

Synergies In the Deal

When asked about the feasibility of the targets NXP Semiconductors has set for cost savings that would occur from the two companies merging, Clemmer replied, “It's very clear. It doesn't require a lot of hard work. It's more support and G&A functions.

“It's not really anything that's significant – any program killing. It's really the ability to grow together and bring the fundamental core technology together.”

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The No. 1 Automotive Semiconductor Company

“Clearly, we'll be the number one automotive semiconductor manufacturer,” Clemmer said. “We'll bring a complimentary product portfolio together that will really make a difference with the automated driving in the future and driver assistance to make driving safer.”

He concluded, “But even on the other side, we'll be able to bring our security and their processing capability to address the Internet of Things going forward.”