van Houten’s Come-Back

It seems only right that Philips should look after Frans van Houten, when Frans van Houten has looked after Philips.

van Houten is to become COO of Philips, and is nominated as the next CEO when Gerard Kleisterlee, the current CEO, retires in March next year.

What goes around comes around.

18 months ago, around Christmastime 2008, the New York private equity company Kohlberg Kravis and Roberts (KKR) had ousted van Houten as CEO of NXP Semiconductors.

KKR has bought NXP from Philips at an excessive valuation of $11 billion just as the semiconductor industry went into a vicious down-cycle exacerbated by the credit crunch.

KKR had loaded up NXP with a crippling $6 billion of debt, and NXP was haemorrhaging cash.

van Houten got his marching orders.

But Philips, its coffers swollen with the lavish proceeds of the NXP sale, did not forget that van Houten had looked after them.

van Houten had extracted a fabulous price for NXP from KKR, and Philips was grateful for this unexpectedly munificent cash contribution.

Later on, van Houten demonstrated his deal-making skills again by extracting $1.6 billion from ST-Ericsson for NXP’s wireless business.

This was done at a time when Freescale was trying, and failing, to find a buyer for its wireless business. In the end Freescale folded the operation.

So Philips have got themselves a master deal-maker to head up the company. In a company which did one of the greatest deals of the century when it co-founded TSMC with the Taiwan government, deal-making is highly valued as, indeed, it is across Holland – a country renowned for centuries for its deal-making nous.

Tags: equity company, frans van houten, Private equity, semiconductor industry

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6 Comments

  1. Anonymous
    April 18, 2011 16:58
  2. David Manners
    July 10, 2010 20:06

    I agree, Another ex-NXPer, IMHO van Houten was naive about the motives, morals, mortivations and methods of PE companies when NXP was sold to KKR. But he was never a break-up guy. And he’s not naive any more.

  3. Another ex-NXPer
    July 10, 2010 18:59

    Don’t see how this implies Philips will be broken up. After all van Houten’s differences with KKR were all about keeping the remainder of NXP together (van Houten’s view) against KKR’s determination to further break it up.

  4. Anonymous
    July 09, 2010 19:51

    for me it shows only one direction: Philips Board is maybe tired of trying to really grow, as they have been trying for the past decades, and decided the only way is to further break the company (maybe separating Consumer Electronics from Lighting/Medical?). For this task, maybe van Houten is appropriate, but I do agree he is no example of a real leader.

  5. David Manners
    July 09, 2010 08:45

    I agree, rundablage, van Houten showed no great talent for running a semiconductor company – but that takes specialist understanding and van Houten was never a semiconductor guy. But, now that Philips has no semiconductor operation any more, maybe that doesn’t matter too much.

  6. rundablage
    July 09, 2010 08:17

    Hi David,
    excellent analysis – he’s is a deal maker…
    But is he a leader? From my perspective his managing performance at Philips/NXP Semiconductors is max middle-rate. He failed in reducing central RnD spendings, he had no grasp about the validity of the fairy tales presented by the BU-Home management and he wasn’t able to overcome the silo behavior in the company.

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