Texas Instruments Inc. (TI) (NYSE: TXN) has announced it will be buying National Semiconductor (NYSE: NSM) for $25 per share in an all-cash transaction of about $6.5 billion. The two firms have signed “a definitive agreement.”
The move combines TI with its previously largest competitor in the analog semiconductor space.
Apparently the boards of directors of both companies have unanimously approved the transaction.
Rich Templeton, TI’s chairman, president and CEO, said the acquisition was “about strength and growth.” He added that National boasted an “excellent development team,” and that by combining both firms’ products would create “an analog portfolio of unmatched depth and breadth.”
TI believes it can also help to accelerate National’s growth with its much larger sales force. “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,” he said.
Meanwhile, Don Macleod, National’s CEO, said the two companies “complement each other very well.”
Chip pundit Wil Strauss told RCR Wireless News the move had come out of the blue and was “a total surprise.”
Strauss says he doesn’t foresee any antitrust problems with the deal, since there are still several big analog houses left, including STMicroelectronics, Maxim, Analog Devices, and others, but that the move will surely lead to redundancies, most likely in the Silicon Valley area. “I think Texas and Arizona (Tucson, the former Burr-Brown operation) will probably come out ahead,” he told us.
TI currently boasts some 30,000 analog products while National brings a further 12,000 to the table.
“TI’s dominance in the analog market was clear, but now it’s unassailable,” says Strauss. “This will also move TI back up in the Silicon supplier rankings, to pass Toshiba to become No. 3 following Intel and Samsung.”
Once the deal goes through in approximately six to nine months, TI believes sales of analog semiconductors will represent almost 50% of its revenues.
The market for analog semiconductors was $42 billion in 2010 and TI reported analog revenue of $6 billion last year, or 14% of the market. National’s revenue in 2010 was about $1.6 billion, or 3% of the market.
