Motorola’s chip-making unit, Freescale Semiconductor, Monday set the terms for its spinoff, saying it will sell 121.6 million shares for $17.50 to $19.50 each to the public.
Underwriters will also have the option to purchase an additional 18.2 million shares to meet demand, according to a filing with the Securities and Exchange Commission.
If the overallotment option is exercised, the IPO would be worth about $2.6 billion.
Motorola announced its plan to spin off the division — its second largest behind cell phones — in October. Analysts had long called for Motorola to spin off the money-losing unit that accounted for $1.5 billion of the company’s $1.8 billion operating loss in 2002. The unit had sales of $4.9 billion last year.
Motorola’s semiconductor unit was founded in Phoenix in 1949, and the business still employs about 3,600 people in the Valley with plants in Tempe and Chandler.
Freescale intends to list the Class A common stock on the New York Stock Exchange under the symbol ‘‘FSL.’’
After the spinoff, Motorola will own all of Freescale’s Class B common shares, which will carry 92 percent of the votes.
In the filing Monday, Freescale said it expects net proceeds from the stock offering of $2.1 billion, or $2.5 billion if the underwriters exercise the full overallotment option.
In conjunction with the stock offering, the company said, it also plans to issue $1.25 billion in debt.
The company said it will distribute $1.5 billion of total proceeds to Motorola, leaving $750 million in net cash and cash equivalents.
Freescale will keep the rest of the proceeds for general corporate purposes, the filing said.