NXP Semiconductor Weighs Stock Sale to Broaden Investor Base

NXP Semiconductor NV (NXPI) is considering asking its owners for another stock sale this year to increase the number of freely traded shares and meet demand from shareholders aiming to invest in the Dutch chipmaker.

Some major shareholders last month sold about 25 million shares in a secondary offering, a stake with a market value of $816 million as of yesterday, increasing the company’s free float to about 25 percent from 13 percent.

“Ultimately we’d like it to be about 80 to 85 percent or more,” Chief Executive Officer Richard Clemmer said yesterday in an interview at the company headquarters in Eindhoven, the Netherlands. “Within the next three to six months, we will probably talk with the shareholders again.”

Clemmer is trying to bolster growth and spending on equipment after restructuring the business by cutting jobs, closing factories and refinancing debt since he started in January 2009. He said the company is not for sale after analysts said rivals may be interested in parts of NXP.

NXP, whose customers include Dell Inc., Apple Inc. (AAPL), Nokia Oyj and Siemens AG (SIE), fell as much as 4.7 percent from its intraday level on the Nasdaq Stock Market yesterday, closing 1.3 percent lower. In German trading, the shares dropped as much as 4 percent today.

“A possible share sale most of the time damps investor sentiment,” Tom Muller, an analyst at Theodoor Gilissen Bankiers, said via phone today. “It also has become clear that a takeover is not in sight, which has an impact on the share price.”

‘Difficult Periods’

The company posted an operating profit of $273 million for 2010, after a loss of $931 million a year earlier. Sales rose 25 percent to $4.4 billion. “We had some very difficult periods. We were at the abyss and looked in but fortunately got to walk away from it,” Clemmer said.

NXP and competitors including Infineon Technologies AG (IFX) and Intel Corp. benefit as makers of consumer electronics and cars have recovered from the recession and buy more computer chips.

Clemmer, a 60-year-old Texan, is looking for ways to accelerate growth by making chips that help to reduce carbon- dioxide emission and let people connect different mobile devices. These chips are part of the company’s so-called “high- performance mixed-signal” offerings, or HPMS, that also allow companies to use ID-authentication to secure goods, he said.

Cutting Debt

“The high-performance mixed-signal market is expected to grow with 9 percent to 11 percent or so in the next couple of years and we think we can grow by about 15 percent,” Clemmer said. “Earnings could even grow at a faster rate as we reduced debt,” he said, adding that the debt will be well below $3 billion once the Sound Solutions business has been sold in the second quarter.

NXP had more than $6 billion of debt after it was carved out from Royal Philips Electronics NV in 2006, the CEO said.

NXP is also betting on investments in near-field communication technology, which allows smartphone users to make purchases by tapping them on or waving them in front of electronic readers in stores. Apple may use the technology in its iPhone 5 handset, Forbes reported earlier this year.

About 70 million NFC units may be sold this year, NXP said. This will double in 2012 and probably approach 200 million to 300 million in the following year, Clemmer said.

NXP may be an interesting target for companies such as Intel Corp. (INTC), Qualcomm Inc. (QCOM) and Broadcom Corp. (BRCM) because of its near-field communication technology, while a full takeover of the chipmaker is less likely, analysts including ING Wholesale Banking’s Niels de Zwart, have said.

‘Not for Sale’

“We are not for sale,” Clemmer said. “I haven’t had any discussions with the CEOs of these companies in a number of weeks and when I did it, it was as a customer.”

Texas Instruments’s April 4 announcement that it agreed to buy National Semiconductor Corp. (NSM) for about $6.5 billion to add higher-margin analog semiconductors is feeding speculation about industry consolidation, analysts including Muller have said.

“We want to play the role of consolidator in the industry,” Clemmer said, adding that the company will look for acquisitions that add technology.

NXP Semiconductor was acquired by KKR & Co., Bain Capital LLC and three other private equity firms in 2006 in a $9.4 billion leveraged buyout from Philips.

The acquisition, which included assumed debt of 4 billion euros, was the biggest LBO in the semiconductor industry’s history at the time and was completed less than a year before credit markets seized up in August 2007.

In August last year, KKR and Bain Capital sold shares in a $476 million initial public offering. KKR still owns 19.2 percent of the stock, Bain Capital 15.4 percent and PPTL Investment 14.2 percent, according to Bloomberg data.

To contact the reporter on this story: Maaike Noordhuis in Amsterdam mnoordhuis@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net

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