Freescale, the two-year-old semiconductor company spun-off from Motorola, on Friday accepted a $17.6bn takeover bid from a private equity consortium led by the Blackstone Group.

The move will force a rival consortium led by Kohlberg Kravis Roberts to make a higher bid or drop out.

A sale to either consortium would be the largest ever leveraged buy-out in the technology sector.

A bid war would pit some of the biggest names in the buy-out industry, such as Blackstone, KKR, Carlyle and Bain Capital against one another, and underline the desire by private equity groups to clinch large take-overs to invest the record amounts of funds they have raised.

Freescale issued a statement after the market closed in New York saying it had entered into a definitive agreement to be acquired by a consortium that included Blackstone, the Carlyle Group, Permira Funds and Texas Pacific Group.

The private equity groups declined to comment but people familiar with the situation said they had increased their bid by about 5 per cent since the surprise emergence of the KKR consortium earlier this week.

The merger agreement allows Freescale to solicit alternative proposals from third parties during the next 50 calendar days.

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