Texas Instruments is paying a 78 percent premium for National Semiconductor. The chipmaker announced an acquisition deal Monday for $25 per share in an all-cash transaction of about $6.5 billion.
The purchase marks further consolidation in the technology industry, this time merging two analog semiconductor players with different strengths. The market for analog semiconductors was $42 billion in 2010. TI is the market leader with 2010 analog revenue of $6 billion, or 14 percent of the market. National's revenue in 2010 was about $1.6 billion, or three percent of the market.
TI brings 30,000 analog products, a broad customer reach, and the industry's first 300-millimeter analogy factor to the table. National brings 12,000 analog products, industrial power customers, and customer design tools.
Strength and Growths
Rich Templeton, TI's chairman, president and CEO, said the acquisition is about strength and growth. As he sees it, National has a strategic development team and its products will offer an unbeatable portfolio of analogy semiconductors.
"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," Templeton said. "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."
TI will continue operating National's plants in Maine, Scotland and Malaysia. Each site has additional capacity to increase production. The transaction is expected to close in six to nine months, but analysts said the integration may be more difficult than it appears on the surface.
The $6.5 billion acquisition is one of the largest in 2011, and it probably won't be the last. Although TI is paying a premium for National, some analysts feel it's too soon to judge whether the price was ultimately too high.
"They paid what...