Texas Instruments (TI) announced late last night that it will be acquiring National Semiconductor for $6.5 billion (Â£4 billion), meaning it will be paying a 78 percent premium for the pleasure.
The boards of both companies approved the move with TI agreeing to pay $25 per share, which was 78 percent above the closing price of the National Semi shares on Monday evening. Following the announcement, TI shares slipped by one percent while National Semi's share price soared by 70 percent. The move, should it be approved, will see a major consolidation in the analogue chip market and will see TI become the third largest chip manufacturer in the world, jumping ahead of Toshiba. Analogue chips convert sound, video and temperature into digital signals for a wide variety of electronic devices.
"This acquisition is about strength and growth," said Rich Templeton, TI's chairman, president and CEO. "National has an excellent development team, and its products combined with our own can offer customers an analogue portfolio of unmatched depth and breadth.â€ National Semiâ€™s portfolio includes 12,000 analogue products and the company has a strong presence in the industrial power market, TI said in their statement. Once the merger is approved, TIâ€™s total analogue chip sales will make up almost 50 percent of the companyâ€™s total revenue.
With TI already holding the largest chunk of the analogue chip market (14 percent) in 2010, according to its press release, the acquisition of National Semi will only confirm that position.
Source: Texas Instruments