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TI buys National Semiconductor

Posted: 06 Apr 2011 ?? ?Print Version ?Bookmark and Share

Keywords:acquisition? analog? IC? market?

Texas Instruments Inc. and National Semiconductor Corp. has announced they have signed a definitive agreement under which TI will acquire National Semi for $25 per share in an all-cash transaction of about $6.5 billion. The boards of directors of both companies have unanimously approved the transaction.

The deal would bring together two of the longest-running semiconductor companies and two of the largest vendors of analog chips. TI, founded in 1947, is the No. 1 vendor of analog chips. National, founded in 1959, accounted for about 3 percent of the $42 billion overall analog IC market in 2010.

"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."

"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."

Each company has unique strengths. Among them are the breadth of TI's 30,000 analog products, extensive customer reach, and industry-leading manufacturing including the world's first 300mm analog factory. National brings a portfolio of 12,000 analog products, a strong position with customers in the industrial power market, and excellent customer design tools. Upon close of the transaction, National becomes part of TI's analog segment, and sales of analog semiconductors will represent almost 50 percent of TI's revenue.

Steve Ohr, an analog semiconductor analyst at Gartner, said there is a good deal of overlap in the product offerings of TI and National. Ohr said the acquisition would provide TI with a way to grow rapidly, but that it wouldn't necessarily give TI product lines that it couldn't have developed internally.

Ohr said TI and National would complement each other in some ways and that, culturally, the companies are very similar. "These companies were very similar in their talents and strengths," Ohr said.

"There are a lot of overlapping products, but I don't think that's an issue at all. I think the real thing here is they are acquiring customers and diversifying their customer base," said Susie Inouye, an analyst with market research firm Databeans. Inouye said the acquisition would bring TI into a lot of new customers in the industrial marketplace.

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