Arranged Marriage May Be Next for Freescale

Whatever the motive for a potential buyout, the interest in Freescale hasn't hurt its stock. The company's shares closed up 19%, or $5.89, at $36.83 on Monday.

Freescale has a number of attractive assets to lure buyers, say analysts, pointing to the company's cell-phone chip business. Unlike the PC microprocessor market, the wireless handset business is still looked at favorably by investors.

Freescale may be dwarfed by cell-phone chip giants such as Texas Instruments(TXN Quote) and Qualcomm(QCMM Quote), but it has a has a marquee customer in its former parent company Motorola(MOT Quote); and the company makes various key parts for cell phones, including baseband chips, RF chips and analog components.

"You look at the companies that have been doing well in cell phones -- it's companies that have a large percentage of the bill of materials," says Semico Research analyst Tony Massimini.

Roughly 30% of Freescale's sales come from supplying chips to automakers -- a business in which NXP also has a strong presence.

Combining the two companies and their complimentary businesses could create a much more dominant player in those markets than the two are able to be as separate entities.

Freescale and NXP each had roughly $5.5 billion in chip sales in 2005, ranking them twelfth and eleventh respectively among the world's top chip companies by revenue.