Texas Instruments (TI) has signed a definitive agreement to acquire analog chip maker National Semiconductor for US$6.5bn.
TI will pay US$25 per share in an all-cash transaction. Both companies are leaders in the analog semiconductor business.
The boards of both companies have unanimously approved the transaction.
“This acquisition is about strength and growth,” said Rich Templeton, TI’s chairman, president and chief executive officer.
“National has an excellent development team, and its products combined with our own can offer customers an analog portfolio of unmatched depth and breadth. In recent years, National’s management team has done an outstanding job of improving margins and streamlining expenses, which upon close will increase TI’s profitability and earnings per share, excluding transaction costs.
“Our ability to accelerate National’s growth with our much larger sales force is the foundation of our belief that we can produce strong returns on our investment. The combined sales team will be 10 times larger than National’s is today, and the portfolio will be exposed to more customers in more markets,” Templeton said.
Analog semiconductor portfolios
TI has more than 30,000 analog products in its portfolio while National has more than 12,000 analog products.
Once the transaction is complete, analog semiconductors will account for 50pc of TI’s revenues.
The market for analog semiconductors was US$42bn in 2010. TI is the market leader with 2010 analog revenue of US$6bn, or 14pc of the market. National’s revenue in calendar year 2010 was about US$1.6bn, or 3pc of the market.
“Our two companies complement each other very well,” said Don Macleod, National’s chief executive officer.
“TI has much greater scale in the marketplace, with its larger portfolio of products and its large global sales force. This provides a platform to enhance National’s strong and highly profitable analog capability, power management in particular, leading to meaningful growth,” McLeod said.
The transaction is expected to close in six to nine months.