Freescale Semiconductor Buyout

Freescale Semiconductor, Inc. (FSL)
$18.9B Leveraged Buyout

Summary

$17.6B buyout of semiconductor company

$18.9B, with assumed debt
Largest-ever technology buyout

Tops buyout of Sungard Data Systems

By private equity consortium Club deal

Blackstone Group
Carlyle Group
Permira Funds
Texas Pacific Group

Freescale Semiconductor was spun-out of Motorola in 2004
FSL considered alternative transactions

Acquiring Philips Electronics' semiconductor business
Merging with a "third party"
See Background of the Merger

Deal terms

$40 per share, for Class A and Class B shares
No financing condition
50 day window for FSL to solicit superior proposals Go shop

Announced 9.15.06

Competing offer

From rival consortium

KKR, Bain Capital, Apax Partners, Silver Lake Partners

Caused winning group to raise its offer by 10%

Closed 11.13.06

Club Deal

Consortium buyout by

Blackstone Group
Carlyle Group
Permira Funds
Texas Pacific Group

Deal summaries

Form S-4 The Transactions
Form S-4 Related party transactions

Agreements

Limited partnership agreement 12.01.06
Management fee agreements 12.02.06

Advisors

Financial

FSL: Goldman Sachs
Sponsors: Credit Suisse / Citigroup / Blackstone

Legal

FSL: Wilson Sonsini
Sponsors: Skadden Arps

Merger Agreement Hyperlinked

General

EDGAR filing
Hyperlinked version
Detailed hyperlinked index follows

Article I Definitions

1.1 Definitions

Article II Transactions

2.1 The Merger
2.2 Closing
2.3 Effects of the Merger
2.4 Certificate of Incorporation; Bylaws
2.5 Directors and Officers of Surviving Corporation

Article III Effect of Merger

3.1 Effect on Capital Stock
3.2 Treatment of Options and Other Equity Awards
3.3 Adjustment of Merger Consideration
3.4 Dissenting Shares
3.5 Payment and Exchange of Certificates

Article IV Company Reps

4.1 Organization
4.2 Authority; Enforceability
4.3 Non-Contravention

4.4 Governmental Consents
4.5 Capitalization of the Company
4.6 Company Subsidiaries

4.7 SEC Reports; Financial Information; Cash Balances
4.8 No Undisclosed Liabilities
4.9 Absence of Certain Changes or Events

4.10 Contracts
4.11 Title to Properties
4.12 Compliance with Law and Reporting Requirements
4.13 Litigation
4.14 Employee Compensation and Benefit Plans; ERISA
4.15 Labor Matters

4.16 Intellectual Property
4.17 Environmental Laws
4.18 Taxes
4.19 Disclosure Documents
4.20 Insurance
4.21 Brokers
4.22 Fairness Opinion
4.23 Foreign Corrupt Practices Act
4.24 Rights Agreement
4.25 Customers
4.26 Affiliate Transactions
4.27 Product Liability and Recalls

Article V Parent - Merger Sub Reps

5.1 Organization
5.2 Authority; Enforceability
5.3 Non-Contravention

5.4 Governmental Consents
5.5 Financing
5.6 Disclosure Documents

5.7 Brokers
5.8 Operations of Parent and Merger Sub
5.9 Ownership of Company Capital Stock

5.10 Litigation
5.11 Solvency; Operation of the Company After the
Effective Time

Article VI Additional Agreements

6.1 Conduct of Business Prior to the Closing
6.2 Stockholders Meeting; Board Recommendation
6.3 Proxy Statement; Other Filings

6.4 Access to Information
6.5 Solicitation
6.6 Further Action; Reasonable Best Efforts

6.7 Directors and Officers Indemnification and Insurance
6.8 Public Announcements
6.9 Financing

6.10 Actions with Respect to Existing Debt

6.11 Notification
6.12 Employment and Benefits Matters
6.13 Section 16(b)

6.14 Takeover Statutes
6.15 Approved Enterprise Plans
6.16 Obligations of Merger Sub

Article VII Closing Conditions

7.1 Mutual
7.2 Parent and Merger Sub
7.3 Company

Article VIII Termination

8.1 Termination
8.2 Effect of Termination
8.3 Fees and Expenses
8.4 Procedure for Termination

Article IX General Provisions

9.1 Non-Survival of Representations, Warranties and
Agreements
9.2 Notices
9.3 Severability

9.4 Entire Agreement
9.5 Assignment
9.6 Amendment

9.7 Waiver
9.8 No Third Party Beneficiaries
9.9 Governing Law

9.10 Remedies
9.11 Jurisdiction
9.12 Counterparts

9.13 Interpretation

Proxy Solicitation

Shareholder meeting 11.13.06

99% for; 73% of outstanding
Press release 11.13.06

Proxy statements

Definitive proxy statement 10.19.06

Preliminary proxy statement 10.03.06

M&A Financing

Proxy statement summary

No financing condition

Backed by $300mm in guarantees

See Private Equity Financing Conditions

Equity financing commitments

Merger agreement §5.5

Blackstone Capital Partners V
TPG Partners V
Carlyle Partners IV
Permira IV L.P.2
Permira Investments Limited
P4 Co-Investment l.p

Debt financing commitments

Merger agreement §5.5

Credit Suisse entities
Citigroup Global Markets

Other terms

Financing covenant - Merger agreement §6.9

Proxy statement summary

Debt refinancing - Merger agreement §6.9

Proxy statement summary

Deal Protection

No shop covenant

Subject to 50 day go shop provision

FSL can solicit competing proposals until 11.03.06
FSL can continue to entertain superior proposals
received before this date
Merger Agreement §6.5
Proxy statement summary

HCA buyout also used a 50 day go shop provision

Break-up fees

$300mm after "go shop" period;
$150mm if a proposal is made during "go shop" period

Merger Agreement §8.3
Proxy statement summary

Fairness Opinions

Fairness opinions

Goldman Sachs

High Yield Financing 2007

A/B exchange offer

$5.95B total

$500 mm senior floating rate notes due 2014
$1.5B 9^1/8% - 9^7/8% senior PIK-election notes due 2014
$2.35B 8^7/8% senior fixed rate notes due 2014
$1.6B 10^1/8% senior subordinated notes due 2016

Initial private placement 11.16.06
Select S-4 sections 3.08.07

SEC filings

Form S-4 3.08.07

Exhibits

Agreements

Indentures

Credit Agreements

Disclosures

Form S-4: Other indebtedness 3.08.07

Agreements

$4.25B credit agreement 12.01.06
Security agreement 12.01.06
Guaranty 12.01.06
Intellectual property security agreement 12.01.06
Amendment 1 to the credit agreement 2.14.07

Employment

Disclosures

M&A proxy: Interests of directors and officers 10.19.06
High yield S-4: Executive compensation 3.08.07

Agreements

Voting trust agreement
2006 Management incentive plan
Nonqualified stock option agreement
Nonqualified stock option agreement (rollover option)
Restricted stock unit award agreement
Dividend rights plan
Award agreement
2006 Interest plan
Employment agreement - Mayer
Employment agreement - Chennakeshu

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