The primary candidate for the deal might be JAC Capital, as it has strong relations with the company’s management
NXP Semiconductors NV (NASDAQ: NXPI) is a semiconductor manufacturer based in Eindhoven. The Netherlands based company was incorporated in 2006, and in the recent turn of events, it has shown willingness to liquidate its standard products business. FBR views this whole process as a net positive in favor of NXPI.
FBR analyst, Christopher Rolland believes that NXPI has been deliberating to sell standard product business unit for a while and seeks $2 billion consideration for such. The company has received notification of interest from JAC capital, along with many Chinese holding companies. The analyst understands the only reason NXPI is still holding on to the unit is the absence of lacerative offers, which it is expecting to receive at some point in the future.
The odds of the sale of the unit are more realistic when it comes to JAC, as both the companies enjoy friendly relations. The basis of these relations can be traced back to the sale of RF division by NXPI worth $1.8 billion to JAC capital. NXP has shown interest in forming a joint venture with JAC capital in the past, and the potential of realization of such a happening remains favorable, as regulatory scrutiny against non-US based companies is rather lenient when it comes to transfer of key technologies.
Mr. Rolland summarizes that in the event of standard product business unit sale, NXPI shares will be diluted by $0.6, given that 4% of debt is paid. It will also allow management more freedom to invest in less capital intensive areas and push for more growth and profitability.
The analyst maintained his outperform rating for NXPI and kept the price target at $105. The stock closed at price of $82.74 on Friday.