Freescale Semiconductor is to be acquired by a consortium of investment companies as part of a $17.6bn (£9.4bn) deal.
Freescale was once part of Motorola and makes embedded chips for the auto industry and also makes mobile phone chips.
The company is being acquired by a private equity consortium led by the Blackstone Group, and includes The Carlyle Group, Permira Funds and Texas Pacific Group.
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The firm first revealed it was in takeover discussions last week. The Freescale board has unanimously approved the deal, but there is a clause in the contract which allows the company to accept a better takeover offer within the next 50 days.
The firm competes heavily against the likes of Qualcomm and Texas Instruments in the growing wireless markets it operates in.
Freescale recently announced a chip that can store information rather like a hard drive, which uses magnetic technology instead of an electrical charge.
Freescale became a publicly traded company in July 2004 and employs around 24,000 people.
The company is based in Austin, Texas, and has design, research and development, manufacturing and sales operations across over 30 countries.
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