$10 B Bid for Philips Unit

Elena
02 Aug, 2006
New York City

The Wall Street Journal said the deal may be worth more than eight billion euros, or $10.26 billion, citing people familiar with the matter. Since 2005 Philips has been seeking a separate legal structure for its chip unit, which had 2005 sales of 4.62 billion euros, or $5.8 billion and makes products for mobile phones and cars.

[R]8:00AM $10.26 billion offer for Philips Electronics NV''s chip unit.[/R]
Kohlberg Kravis Roberts & Co. and Silver Lake Partners are reportedly close to a deal with Philips Electronics NV''s chip unit. In its online edition the Wall Street Journal said the deal may be worth more than eight billion euros, or $10.26 billion, citing people familiar with the matter.

In July, Philips'' ((PHG)) shares advanced on news that three groups of private-equity firms were in the final stage of bidding more than $10 billion for the company''s semiconductor division. The other bidding groups were Blackstone Group, London-based Permira Advisors and Texas Pacific Group, and Apax Partners Worldwide LLC, Bain Capital and Francisco Partners.

In June Philips said it was planning to spin off its semiconductors unit in an initial public offering during the second half of the year as part of an effort to produce more predictable earnings.

Since 2005 Philips has been seeking a separate legal structure for its chip unit, which had 2005 sales of 4.62 billion euros, or $5.8 billion and makes products for mobile phones and cars. Company’s shares rose on Wednesday, with Dutch-listed shares rising 3.9%.


[R]7:30AM Asian markets recover from poor start on takeover battle.[/R]
Asian markets were higher Wednesday. The Nikkei 225 Average gained 0.15% to 15464.29. On the corporate front, shares of Toyota declined 0.5%. Sales data posted Tuesday revealed the auto maker has overtaken Ford to rank as the No. 2 selling brand in the U.S. behind General Motors. Mitsubishi shares shed 2% despite reporting its quarterly net loss narrowed. Shares of Hitachi sank 3.5% following reports it may face a lawsuit over possible design flaws in its nuclear power plant turbines. Sony lost 1%.

Hong Kong shares finished higher, led by property developers on hopes the U.S. interest rate-hike cycle is nearing an end. The Hang Seng Index gained 0.7% to 17032.75. Sun Hung Kai Properties climbed 1.9%. Cheung Kong rallied 1.1%, while Henderson Land Development gained 1.7%.

South Korean shares ended higher, with automobile and technology stocks leading gainers. Telecommunications stocks bucked the trend. The Korea Composite Stock Price Index, or Kospi, ended 0.6% higher at 1295.11. Turning to other markets around the region, the Weighted Price Index of the Taiwan Stock Exchange gained 0.5% to 6471.42 while Australia''s S&P ASX/200 shed 1% to 4931.5.


[R]6:30AM Upbeat earnings outlooks help Europe to a strong start.[/R]
European markets were higher on Wednesday morning. The U.K. FTSE 100 index gained 0.5% at 5,970, the German DAX Xetra 30 index rose 0.7% at 5,634 and the French CAC-40 index climbed 0.8% at 4,988. British Cadbury Schweppes climbed 3% stating that first-half net profit advanced to 819 million pounds from 237 million pounds on 22.5% revenue growth and in France, Danone gained 2.5% reporting that its first-half profit rose stronger than forecast and it upped its revenue growth view.

In the banking sector, French bank BNP Paribas advanced 2.4% reporting that its second-quarter net profit gained 30.6% Swiss Credit Suisse Group shed 3.5% as it disappointed the market, despite the unexpectedly strong growth after second-quarter profits came only in line with market expectations.

Oil prices rose Wednesday as traders nervously observed a tropical storm in the Caribbean and the fighting in the Middle East, fearing supply threats. Light sweet crude for September delivery added 38 cents to $75.29 a barrel. September Brent gained 43 cents to $76.32 a barrel at London''s ICE Futures exchange.

Gold hit a high of $649.75 an ounce as firm oil prices and a volatile US dollar sparked off speculative buying. The euro was slightly lower against the U.S. dollar Wednesday as markets awaited signals from the European Central Bank on its future interest rate course. The euro bought $1.2813 in early European trading, just below the $1.2817 it bought in New York late Tuesday. The British pound slid to $1.8752 from $1.8758. The dollar was barely lower against the Japanese currency, falling to 114.47 yen from 114.52 yen.