I agree with motorolaSPS (such a great names, great history). Hey, jda, here is my more than 2 cents. 101% Blackstone is looking for a buyer. In the case of BBRY, the management did deny the story. Now they did not. Even in the case of LBO from 2006, the news broke earlier and it came true. I'm 101% Blackstone is searching for a buyer. The company has reached its good potential for now. Blackstone fears a new downturn, maybe an outright crash. They want to sell the risky asset that is FSL. One of their divisions, the digital networking is in decline (after riding the outstanding wave of the China LTE story).
You ask me about potential buyers? Intel for some of the Dig Networking portfolio. It fits well for their servers into the Cloud RAN. The Microcontroller & Analog and Sensors could be more interesting for Samsung (as it was rumoured), as well Micron (why not). As for Automotive, there could be many buyers on the street.
One thing is almost certain. I doubt one single buyer will want to keep it all. As in the case of Mindspeed, the buyer was interested in 80% of their company and sold the rest to Intel I believe.
Regarding the price target: it is between 38-40 $/share.
Not really. Of course, Blackstone (along with TPG and Carlyle) are going to try to get the most they can out of this transaction. My post here was to try to clarify that the break-even is far lower than you'd calculate. I own no shares, so I'm not inclined to do the detailed analysis, but it would start with an understanding of what Blackstone's current out of pocket investment is, given the nature of the LBO financing and the current bond structure.
Funny, I knew that was the math you did. It doesn't work that way. It's far more complex, consider the billions in bonds that were bought back at pennies on the dollar, as low as .25 if I recall. Those bond investors' losses come right off the top of the $17B when you add the numbers up.
Imagine I buy a $1M home, and the local bank holds my mortgage, $900K. Somehow, I find they are selling off their loans and this one is part of the portfolio, and I manage to buy that paper for $200K. My total skin in the game is now $300K, the bank has taken a $700K loss, not me. (Of course, banks don't trade individual mortgages, but the FSL bonds traded. I could have bought $10K for $2500, and Blackstone did just that. I don't know their current break-even on their FSL investment.
I just know that Michel Meyer is still laughing.
Have the cuts since this article happened? http://www.bizjournals.com/austin/blog/techflash/2015/01/freescale-cuts-an-undisclosed-number-of-jobs.html
Where's the synergy or leverage? If Micron were trying to get into the IoT or IoE world, buying Freescale would be smart, buying NXP or merging with them would be smarter. ST would be an equally smart move. Continuing their relationship with Intel might ultimately be the smartest move, if Intel can shed the stink of arrogance that everything they touch is gold.
I have been here through it all. Thanks to Msr. Meyer I paid off my house. If the original buyers could get their debt out of it, and leave what's left over to the new company, they'd do it. They need to get $2B or so out of it and it's a done deal.
As far as the site upgrades, it's really something you have to do every 20yrs or so, whether you're going to sell or not. Anyone with a lot of cash who is going to buy doesn't care if your carpet is old or the stairwells have cobwebs. I think that was genuinely done to improve the work environment. We've sold everywhere else, except the other site in Austin (stand-alone fab). What anyone is buying is IP, customers, and some know-how. Brick and mortar are worthless, except where you have a factory operation.
Bring on the new badges. Love to see TI in the conversation, Freescale and TI have a lot of complimentary businesses. Freescale has a lot of ex-TI managers...wonder if TI+Newco would keep them or replace them with existing TI'ers! My karma ate your dogma....
They hyped the culture in the last earnings call. From a shareholder perspective I'm obviously happy about the shares going up, but I can see how an employee would be rolling his eyes.
Were you there when Michel Mayer orchestrated the the largest scam of a private equity firm that I'm aware of, in the 2006 sale to Blackstone? The focus then was to cook the books to make it look like the next decade of semi sales would continue double digit growth. Instead, it was a sign of a top.
It will be interesting to see how the numbers work our if such a sale occurs. Look at the current book value, look at the Price to Sales ratio. Both are out of line with other Semi Companies.
The buyer better be able to capitalize on every bit of IP this company has in their vaults. Not suggesting there's no value there, only that it has yet to be unlocked. History will show the original Blackstone deal to be one of the very worst LBOs ever. They paid 4X sales when 2X sales was the going benchmark, based on promises of future sales that never quite came. Layers of sales management managed to cook the books in a way that made for a far rosier future than could possibly come.