A 70% premium for NSM! Whew! The premium is either an indication that TXN is paying too much or an indication of how undervalued NSM was before the deal. IMHO, it is the latter; I say that not because I think I actually know what a true value of NSM is, but because (a) I am guessing that TXN would know how to value NSM better than Mr. Market, and (b) the whole sector seems undervalued to me. We'll see happens to it tomorrow, but if "b" is right, we will be seeing more buyouts over the next 6-12 months (assuming of course that credit conditions don't materially worsen).
TI to acquire National Semiconductor
Complementary portfolios are foundation for growth
Conference call on TI and National websites at 4:30 p.m. CDT / 2:30 p.m. PDT today
Press Release Source: Texas Instruments Incorporated; National Semiconductor On Monday April 4, 2011, 4:05 pm
DALLAS and SANTA CLARA, Calif., April 4, 2011 /PRNewswire/ -- Texas Instruments Incorporated (TI) (NYSE:TXN - News) and National Semiconductor (NYSE:NSM - News) today announced they have signed a definitive agreement under which TI will acquire National for $25 per share in an all-cash transaction of about $6.5 billion. The acquisition combines two industry leaders in analog semiconductors, each with unique strengths in delivering products to improve performance and efficiency and convert real-world signals in electronic systems. The boards of directors 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."
"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 300-millimeter 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.
The combined company also will benefit from National's manufacturing operations, located in Maine, Scotland and Malaysia, which TI will continue to operate. Each site has additional capacity to increase production. National's headquarters will remain in Santa Clara, California.
Under terms of the agreement, National stockholders will receive $25 in cash for each share of National common stock they hold at the time of closing. TI expects to fund the transaction with a combination of existing cash balances and debt. The acquisition is subject to customary closing conditions, including review by U.S. and international regulators and approval by National's shareholders. The transaction is expected to close in six to nine months.
The market for analog semiconductors was $42 billion in 2010. TI is the market leader with 2010 analog revenue of $6.0 billion, or 14 percent of the market. National's revenue in calendar year 2010 was about $1.6 billion, or 3 percent of the market.
For more information, see www.ti.com/acquire or www.national.com.
Investor webcast
Today at 5:30 p.m. EDT / 4:30 p.m. CDT / 2:30 p.m. PDT, TI and National will hold a live audio webcast for financial analysts and stockholders to discuss the agreement to acquire National.
The webcast will be hosted by the CEOs of each company, Rich Templeton and Don Macleod, and is accessible at www.ti.com/ir and www.national.com/invest. |
