NXP Buys Conexant Unit

NXP Semiconductors has agreed to acquire the broadband media processing assets of Conexant Systems Inc. (Nasdaq: CNXT). The deal includes a $110 million up-front cash payment, and up to $35 million in earn-out considerations. NXP is the former semiconductor unit of Philips, which was acquired in 2006 by KKR, Bain Capital, Apax Partners, AlpInvest and Silver Lake Partners.

PRESS RELEASE
 
In its latest transformational move, NXP Semiconductors, the independent semiconductor company founded by Philips, today announced it will acquire the Broadband Media Processing (BMP) business of Conexant Systems, Inc., (NASDAQ:CNXT). With this transaction, NXP's existing set-top box and digital TV operations will be combined with Conexant's BMP business. The combined operations will create a top three player in digital video systems with the scale to establish a strong leadership position. The deal represents NXP's fourth acquisition since independence and is the first for its Home Business Unit.

Conexant's BMP business, which provides industry-leading solutions for satellite, cable and IPTV applications, accounted for US $205 million in revenue in 2007. Under the terms of the deal, NXP will pay Conexant US $110 million in cash up front, and additional consideration of up to US $35 million based on achievement of certain revenue milestones over the period from closing through 2009.

Conexant's strengths in broadcast operator set-top box (STB) solutions are complementary to NXP's terrestrial IP and retail STB and Digital TV products. Combined, they will offer the widest semiconductor portfolio for STB and digital TV applications in the industry, creating a unique technology source for developing digital video applications: innovative IC solutions for receiving more digital content in terrestrial, cable, satellite and IPTV broadcast environments with best in class picture and sound quality, anytime, anywhere in the home.

“NXP continues on the path to reshape the industry by building scale and leadership positions in its portfolio. By acquiring Conexant's BMP activities, our digital TV and STB business will be strengthened in the operator segment of the market and we position ourselves to compete effectively on a global basis,” said Frans van Houten, Chief Executive Officer, NXP Semiconductors.

“We anticipate many R&D synergies from the combination such as the development of IP that can be reused across NXP's STB and digital television systems portfolio. I am pleased to bring on board a strong team of Conexant engineers who have established a track record of developing industry-leading and award-winning solutions. Also Conexant's BMP management team will bring to NXP their excellent market knowledge and close customer relationships,” said Christos Lagomichos, EVP and General Manager of NXP's Home Business Unit.

“Over the years, the Conexant team has successfully developed complex solutions for a variety of set-top box applications,” said Scott Mercer, Conexant's chief executive officer. “NXP has a long history in consumer electronics, and they possess the scale, skill-sets, and resources required to maintain and expand the positions we established. I am convinced that the combined team will attain an even higher level of success as they continue to deliver innovative, cost-effective set-top box solutions to customers worldwide.”

When the transaction closes, approximately 700 Conexant employees at locations in the United States, India, Northern Ireland, Israel and China will join NXP's Home Business Unit. The transaction is subject to customary closing conditions and regulatory approvals, and is expected to close in the next 60 days.

Conexant's BMP business being acquired by NXP offers a comprehensive suite of digital STB components and system solutions for worldwide satellite, cable and IP entertainment broadcasting networks. The company's product offering includes silicon tuners, demodulators, MPEG audio and video decoders, and DOCSIS