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Several days after confirmation about possible talks in regards of takeover by a third-party, Freescale Semiconductor, a former semiconductor division of Motorola, announced that it has entered into a definitive merger agreement to be acquired by a private equity consortium in a transaction with a total equity value of $17.6 billion.

Under the terms of the merger agreement, the consortium, led by The Blackstone Group, and includes The Carlyle Group, Permira Funds and Texas Pacific Group, will acquire all of the outstanding Class A and Class B shares of Freescale for $40 per share in cash, representing a premium of approximately 36% over Freescale’s average closing share price during the 30 trading days ended September 8, 2006.

The board of directors of Freescale has unanimously approved the merger agreement and resolved to recommend that Freescale's stockholders adopt the agreement.

The merger is subject to customary conditions to closing, including the affirmative vote of Freescale stockholders and requisite antitrust approvals. The merger agreement contains a provision under which Freescale may solicit alternative proposals from third parties during the next 50 calendar days. In addition, Freescale may, at any time, subject to the terms of the merger agreement, respond to unsolicited proposals. If the company accepts a superior proposal, a break-up fee would be payable by the company. There can be no assurance of any alternative proposal.

There is no financing condition to the obligations of the private equity consortium to consummate the transaction, and equity and debt commitments for the full amount of the merger consideration have been received. It is currently anticipated that substantially all of the company’s outstanding Notes will either be tendered for or repaid.

Freescale Semiconductor, which was spun-off from Motorola Corp. several years ago, designs and manufactures various embedded semiconductors for wireless, networking, automotive, consumer and industrial markets. The company is known for its manufacturing of IBM PowerPC micro-architecture based processors.

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