In a strategic move to improve its capital structure and focus on core business growth, Netherlands-based mixed-signal semiconductor supplier NXP Semiconductors has inked a definitive agreement to sell its Sound Solutions division to Dover Corp. Under this deal, Dover’s affiliate Knowles Electronics will acquire NXP’s Sound Solutions business, a provider of speaker and receiver components for the mobile handset market. 

As per the terms of this agreement, Knowles will acquire Sound Solutions for $855 million in cash. In conjunction with the transaction, NXP and Knowles have agreed to the terms of a strategic relationship whereby NXP will become Knowles’ exclusive source for certain high-performance mixed-signal semiconductors. The transaction is expected to close in the first quarter of 2011.

Knowles is part of the Electronic Technologies segment of Dover and is a manufacturer of high-performance transducers used for hearing aids and other high quality acoustic applications. The Itasca, Ill.-based company also designs, manufactures and assembles MEMS microphones for personal mobile device and communications markets.

“Combining the operations of Sound Solutions and Knowles represents another major milestone in our strategy of focusing on high-performance mixed signal markets, and it will help to further improve our capital structure,” said Rick Clemmer, president and CEO of NXP Semiconductors (News - Alert), in a statement. “The micro-acoustic components market offers significant growth potential, which can be best achieved through a focused company, dedicated to this market and with a complete suite of complementary products required for a leadership position. We look forward to participating in that growth as a strategic supplier to Knowles going forward.”

The revenue of the Sound Solutions business was approximately $255 million in the first three quarters of 2010. About 1,000 Sound Solutions employees, who are currently based in Sound Solutions’ headquarters in Vienna, Austria, and its facilities located in Beijing, China, will join Knowles. Existing Sound Solutions customers will continue to be supported under the combined company.