Two of America’s biggest semiconductor companies are to merge, with the news that ON Semiconductor is to acquire Fairchild for $2.4bn in cash.
The acquisition will create a new leader in the power segment of the semiconductor market.
California-headquartered Fairchild makes semiconductors that regulate power in electronics, chips for cars and electrical signal converters.
ON Semiconductor anticipates achieving annual cost savings of $150m within 18 months after closing the transaction.
ON Semiconductor intends to fund the transaction with cash from the combined companies balance sheet and $2.4bn of new debt.
A powerful combination
“The combination of ON Semiconductor and Fairchild creates a power semiconductor leader with strong capabilities in a rapidly consolidating semiconductor industry,” ON Semiconductor CEO Keith Jackson said.
“Our plan is to bring together two companies with complementary product lines to offer customers the full spectrum of high, medium and low voltage products.
“The immediate EPS accretion and potential to significantly augment ON Semiconductor’s free cash flow, makes the Fairchild acquisition an excellent opportunity for ON Semiconductor stockholders.”
Semiconductor image via Shutterstock