Freescale Took Scenic Buyout Route

Philips and Freescale have a number of complementary chip offerings targeting the wireless, automotive and consumer electronics markets. Some analysts speculated at the time that the two companies could be combined to create a new entity that ranked among the top 10 chip companies, or combined and subsequently divided into smaller, more-focused semiconductor firms.

But Freescale ultimately accepted Blackstone's "best and final" offer of $40 a share, based on the greater certainty of that transaction being completed, doubts about KKR being able to finance the acquisitions of both Philips and Freescale and the Blackstone Group's threat to walk away if its offer was not accepted within a tight deadline.

Freescale believed it could continue to negotiate with KKR after inking a deal with the Blackstone Group thanks to the agreement's "go shop" provision. But the day after Freescale and Blackstone sealed the deal, KKR and Silver Lake said they were no longer interested in pursuing a transaction with the company.

Freescale's board has since identified six potential strategic partners, based on size and business interests, to court during the go-shop phase. As of Tuesday however, none have indicated any interest in a transaction with Freescale.

Shares of Freescale were up 0.5%, or 19 cents, to $38.31 in midday trading.

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