Ruminations on the electronics industry from David Manners, Senior Components Editor on Electronics Weekly.
NXP Being Asset-Stripped By Private Equity Owners
NXP is being asset-stripped by its private equity backers led by Kohlberg Kravis and Roberts (KKR), according to Europe’s leading semiconductor industry analyst, Malcolm Penn, CEO of Future Horizons.
“It is now clear that KKR, aided and abetted by the NXP management, are stripping out the NXP heart and crown jewels into a variety of smaller entities that KKR ends up more or less controlling”, Penn told me today, “this is NOT a strategy to ‘slim down the operation to make it more competitive’ it is premeditated murder by a thousand surgical cuts for vested self-interests. With all the good bits gone and all the baggage left behind, all that will be left of NXP is a highly bloated, downsized company with zero revenue growth prospects. Along with Wall Street et al’s bank bonus greed, this is yet another
e example of the dark side of capitalism. The EU and the Dutch government
should be seething with rage.”
The EU and the Dutch government have supported Philips Semiconductor which became NXP for many years. For most of its existence it has been a top ten semiconductor industry company.
A large chunk of the IP being transferred to Trident and Virage has been created at the expense of the European taxpayer.
Since KKR bought NXP in 2006 and loaded it up with around $6 billion of debt, a process of selling off the company in bits has been followed.
First the wireless business was sold to STMicroelectronics; then the digital TV and set-top box business was transferred to Trident Microsystems in a deal under which NXP will receive newly issued shares of Trident common stock equal to 60% of the total shares outstanding post-closing, including approximately 6.7 million shares that NXP will purchase at a price of $4.50 per share, resulting in cash proceeds to Trident of $30 million.
Trident estimated that, after the NXP deal, it will have a portfolio of consumer IP applicable to a range of markets, with over 2,000 granted and in-process patents including motion estimation/motion compensation and conditional access, as well as advanced 45nm SoC technology.
The last time I spoke to Richard Clemmer, NXP’s CEO, he told me KKR were in it for the long-term.
This seems a very odd interpretation of ’long-term’.Tags: backers, dutch government, heart and crown, philips semiconductor, wireless business