As NXP starts IPO process, other companies watch with interest
1 min read
NXP has experienced what can certainly be called 'interesting times' since it was acquired from Philips in September 2006 by a consortium of private investment companies led by KKR.
Even in what were then seen to be good times, the purchase price of more than €8billion – more than $10bn – was seen as generous and a good whack of that ended up on NXP's balance sheet as 'leveraged debt'.
When the global economy hit the skids a couple of years ago, the combination of declining sales, debt obligations and corporate overheads saw NXP become one of a few semiconductor companies regarded as being in intensive care. But, following a clean out of senior management, a new ceo, some 'pruning' and reorganisation of company structure and debt, NXP is still with us.
Now, in the next phase of its recovery, the company has started the process of becoming publicly traded, but how much of NXP will be sold and for how much remains to be seen. According to a document filed with the US Securities and Exchange Commission, the proceeds of the IPO, when it happens, will be used to pay off some of the company's $5.28bn of debt.
Of late, electronics has been one of the last places in which investors wanted to put their money; biotechnology and green technologies were seen as far more interesting. NXP's move is of note because it could well be a bellwether for the electronics industry. Alongside NXP, there is a raft of companies – potentially including picoChip and Icera – whose backers are, let's say, more than interested in seeing a return on their investments through IPOs.
They will all be hoping NXP's move is an indication that market sentiment has changed and that NXP's IPO succeeds. But, beyond that, they'll also be hoping there's enough cash for all.
