But the deal, with a consortium is led by the Blackstone Group, allows Freescale to solicit more bids from other would-be buyers for the 50 days before November 3, possibly pushing the price up further.
If it does find another bidder willing to trump Blackstone, it will have to pay a breakup fee of either $150m or $300m, depending on the timing.
Carlyle Group, Permira Funds and Texas Pacific Group are involved in the Blackstone-led bid. Earlier last week, reports surfaced also connecting a group comprising Apax Partners, Bain Capital, Kohlberg Kravis Roberts and Silver Lake Partners to the bidding.
The Blackstone deal would value Freescale at $40 cash per share, or about 36% more than its average end-of-day closing price over the month before the buyout talks were confirmed. That news, which had a rumored $1.6bn price tag on the company, itself pushed the stock up 20%.
Freescale, over 50 years old and formerly owned by Motorola Inc, is in the business of making chips for devices such as mobile phones, cars and networking equipment.
The company, which was spun out of Motorola in a $13-a-share public offering just over two years ago, reported revenue of $5.8bn last year, and had profit of $584m.
The Blackstone deal would dwarf the $10.6bn, 80.1% takeover of Phillips Semiconductors, announced two weeks ago.
That deal, which left the company named NXP, involved Kohlberg Kravis Roberts & Co, Bain Capital, Silver Lake Partners, Apax, and AlpInvest Partners NV.
It would also be significantly larger that the March 2005 buyout of SunGard Data Systems Inc, which was taken private in a $11.3bn deal. The consortium comprised Silver Lake, Bain, Blackstone, Goldman Sachs Capital Partners, Kohlberg Kravis, Providence Equity Partners and Texas Pacific.
