Did not see that coming.

American chipmaker Freescale will be acquired by Dutch rival NXP in a cash and stock deal worth about $11.8 billion. The combined firm will have a valuation of about $40B, making it one of the larger semiconductor vendors in the world. Freescale shareholders will receive about one-third of a share of NXP stock and $6.25 in cash for each share of Freescale stock.

The deal gives Freescale an “enterprise value” (the net worth of the company minus its cash in the bank) of $16.7 billion. The purchase price is considerably below that sum because Freescale doesn’t actually have cash in the bank; it’s in debt. So NXP will be acquiring Freescale’s debt in addition to its intrinsic value as a company, a pretty typical arrangement in these situations.

For the historically minded, Freescale was originally called Motorola Semiconductor after it was spun off from parent company Motorola (which is now part of Google). Motorola/Motorola Semi created many of the embedded world’s most popular microprocessors, including 68HC05, 68HC11, and the 68000 family that powered early Sun workstations and Apple’s first Macintoshes. The company had some misses, too, like the 88000 RISC architecture and the “RISC-ified” ColdFire. In recent years, the company had most of its success in automotive and deeply embedded industrial segments. The company got its start almost 100 years ago, making radios for automobiles, hence the name Motorola: motorized Victrola.

For its part, NXP was once Philips Semiconductor, the chip-making arm of the giant Dutch electronics firm, before being spun off in 2006. The acquisition is expected to close in the second half of this year.