In September 2006 a consortium of investment groups completed the takeover of Freescale Semiconductor for $17.6 billion, which at the time was the largest ever leveraged buyout of a technology company. Shortly after the deal was finalized chip sales to Motorola and the automotive industry dropped sharply during the 2008-2009 recession putting the company under great financial strain.
Since the takeover Freescale debt has increased dramatically due to a variety of reasons so the investment companies needed a way of recouping their investment. One way they did this was to use Freescales patent IP as financial assets against loans given to them by banks they worked for. In the year 2014 - 2015 Freescale performed nearly twice as many IP transactions than any of their rivals in the semiconductor sector.
Here we look at the motive for taking down flight MH370, the businesses involved in the takeover of Freescale, and the people behind the financial decisions.
Freescale Semiconductor, Inc. was an American multinational corporation headquartered in Austin, Texas with design, research and development, manufacturing and sales operations in more than 75 locations in 19 countries. The company employed 17,000 people worldwide.
A Blackstone-led alliance that includes the Carlyle Group, Permira and the Texas Pacific Group announced yesterday that it had won the bidding for Freescale Semiconductor, a maker of chips for cellphones and cars, with a $17.6 billion deal. It is the largest leveraged buyout of a technology company ever, surpassing last year’s $11.3 billion buyout of SunGard Data Systems.
The Blackstone Group L.P. is an American multinational private equity, alternative asset management and financial services firm based in New York City. As the largest alternative investment firm in the world, Blackstone specializes in private equity, credit and hedge fund investment strategies.
The Carlyle Group is an American multinational private equity, alternative asset management and financial services corporation. As one of the largest private equity and alternative investment firms in the world,
Rothschild a member of the International Advisory Board of The Blackstone Group.
.... recently in the news are the debt restructurings by NXP of the Netherlands and Freescale.
These are both troubled private equity acquisitions in the semiconductor industry. Freescale is owned by a consortium that includes the Blackstone Group, the Carlyle Group, Permira Funds and the Texas Pacific Group. NXP’s owners include Kohlberg Kravis Roberts, Silver Lake Partners, Alpinvest, Bain Capital and Apax Partners.
Freescale Semiconductor has had a curious history of two IPOs, a private buyout, and close to $10 billion in debt. After a long time, the company seems set to move to profitability.
The debt has been a major factor behind Freescale's net losses in recent years. For example, in 2013, Freescale recorded $531 million in operating income on revenue of $4.17 billion.
On December 23, 2013, NXP Semiconductors was added to the NASDAQ 100. Finally, on March 2, 2015, it was announced that NXP Semiconductors would merge with chip designer and manufacturer Freescale Semiconductor in a $40 billion US-dollar deal.
Under the terms of the deal, which was announced late Sunday and is structured as part cash and part stock, Freescale shareholders will receive $6.25 in cash and 0.3521 of an NXP ordinary share for each Freescale common share held at the close of the transaction.
| Moody's Global Credit Research - 02 Mar 2015
Moody's expects that the remaining $402 million of Freescale's 10.75% unsecured notes due 2020 will be repaid in 2015. Following this payment, Freescale will have $4.9 billion of debt outstanding (all secured; earliest debt maturity in 2020).
NXP Semiconductors NV (NASDAQ:NXPI) is said to buy smaller competitor, Freescale Semiconductor, Ltd. (NYSE:FSL). The combined transaction value hereafter will be a whooping $40 billion. This merger will create a leader in the industry of mixed signal semiconductors and auto markets. Once the deal gets through, shareholders of Freescale Semiconductor Ltd. will have an ownership of about one-third of the combined organization.
The shares of Freescale Semiconductor Ltd rose 59% last year while NXP shares rose 51%.
What may not be a known fact is that Freescale Semiconductors have their chips installed in the Amazon (NASDAQ:AMZN) Kindles sold online across the globe.
NXP Semiconductors N.V. (NXPI) and Freescale Semiconductor, Ltd. (FSL) announced the completion of the merger pursuant to the terms of the merger agreement. The merged entity will continue operations as NXP Semiconductors N.V.
The Constitution of the United States provides in Article 1, Section 8, that: the "Congress shall have power . . . to promote the progress of science and useful arts by securing, for limited times, to authors and inventors, the exclusive right to their respective writings and discoveries.” US law, unlike foreign law, requires a patent application to be in the name of the inventor. A company cannot be the inventive entity.
The assignee is the entity that has the property right to the patent. Patents are property. The inventor and the assignee may be one in the same but an employee will more than likely assign a patent to a company.
The assignment of a patent is independent from the inventorship. A patent may be assigned to a series of different entities but the inventorship, once properly stated, does not change
Patents covering semiconductors and related technologies are among the most widely transacted IP assets of late. Data from IP databasing firm ktMINE gives an indication of the chip-related patents that changed hands last year. The tables below rank entities according to the number of individual US-published patent assets they transacted during 2015:
| No. | Name of assignee entity | Number of patents assigned |
|---|---|---|
| 1 | FREESCALE SEMICONDUCTOR, INC. | 26002 |
| 2 | GLOBALFOUNDRIES INC. | 14791 |
| 3 | GLOBALFOUNDRIES U.S. 2 LLC | 14617 |
| 4 | HEWLETT PACKARD ENTERPRISE DEVELOPMENT LP | 11774 |
| 5 | AVAGO TECHNOLOGIES GENERAL IP (SINGAPORE) PTE. LTD. | 11143 |
| No. | Name of assignor entity | Number of patents assigned |
|---|---|---|
| 1 | CITIBANK, N.A., AS COLLATERAL AGENT | 26747 |
| 2 | INTERNATIONAL BUSINESS MACHINES CORPORATION | 15260 |
| 3 | GLOBALFOUNDRIES U.S. 2 LLC | 14804 |
| 4 | GLOBALFOUNDRIES U.S. INC. | 14804 |
| 5 | HEWLETT-PACKARD DEVELOPMENT COMPANY, L.P. | 12226 |
The past few years have seen major upheaval in the global semiconductor industry. Economic pressures and changing technology demand has led to large-scale consolidation, with the sector seeing some of the biggest high-tech M&A deals in history (reports last week suggested that Qualcomm may be about to make a $30 million offer for IAM Market’s NXP).
This is clearly reflected in both tables above. By a huge margin, Freescale Semiconductor was assigned more US assets than any other entity during 2015, with its 26,002 patents dwarfing second-placed Globalfoundries Inc’s 14,791 (although much of this is accounted for by Citibank’s release of its security interest in collateralised Freescale patents in the run-up to the latter’s $11.8 billion merger with NXP).
Gregory Summe
Mr. Summe was the managing director and vice chairman of Global Buyout at The Carlyle Group, a leading global private equity firm, from September 2009 to May 2014. ..... and also was a director of Freescale from September 2010 until its merger with NXP in December 2015; Mr. Summe served as Chairman of the Freescale board since May 2014 and was also Chairman of the Compensation and Leadership Committee of the Freescale board.
Sir Peter Bonfield has been involved with a diverse portfolio of companies including director and non-executive directorships at Dubai International Capital, Actis Capital LLP, Sony Corporation, Ericsson, AstraZeneca, BICC plc, and adviser to Rothschild London, Apax Partners LLP and Citigroup. He also currently serves as chairman of NXP Semiconductors.
Sir Peter L. Bonfield is Non-Executive Independent Chairman of the Board of NXP Semiconductors N.V. Sir Peter has been appointed as a non-executive director and as the chairman of our board of directors in August 2010. Prior to that, Sir Peter was the chairman of the supervisory board of NXP B.V. from September 29, 2006.
Here is a list of half of the 20 Freescale employees I could find that went missing.
Malaysian senior engineer.
Staff engineer.
Top engineer.
Staff engineer.
Senior engineer.
Senior planning manager.
Senior engineer.
Systems engineer.
Malaysian production manager.
Malaysian senior engineer.
Cross referencing the names of the inventors with the passengers on the flight manifesto we see no matches. This means either they weren't on the plane and are still alive, or the manifestos been altered. Even if they did die Freescale would still own the rights to the patents regardless.
Among the 20 Freescale employees that died a handful didn't want the merger between Freescale and NXP to go ahead. They were concerned the investment groups would break apart the company they worked so hard to build up over the years. They expected a large amount of job loses and thought the merger was only good for the share holders and not the company itself.
Since Blackstone and Carlyle etc bought Freescale in 2006 it has been losing money. It looks like from the reports that it really only started to make money after the disappearance of MH370 in March 2014 and then again with the NXP merger in later 2015. The merger talks started in May 2015, 1 year after the disappearance of flight MH370 and has leveraged more IP than anyone else in the field. This is why I think MH370 disappeared.
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