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TI acquires National Semi, grows analogue portfolio

Posted: 06 Apr 2011     Print Version  Bookmark and Share

Keywords:acquisition  analogue  IC  market 

Texas Instruments Inc. announces the signing of a merger agreement to acquire National Semiconductor Corp. for Rs.1,137.02 ($25) per share in an all-cash transaction of about Rs.29,562.59 crore ($6.5 billion). The boards of directors of both companies have unanimously approved the deal that will join the two industry leaders in analogue semiconductors, each with unique strengths in delivering products to improve performance and efficiency and convert real-world signals in electronic systems.

The deal would bring together two of the longest-running semiconductor companies and two of the largest vendors of analogue chips. TI, founded in 1947, is the No. 1 vendor of analogue chips. National, founded in 1959, accounted for about 3 per cent of the Rs.1.91 lakh crore ($42 billion) overall analogue 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 analogue 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 analogue capability, power management in particular, leading to meaningful growth."

Each company has unique strengths. Among them are the breadth of TI's 30,000 analogue products, extensive customer reach, and industry-leading manufacturing including the world's first 300mm analogue factory. National brings a portfolio of 12,000 analogue 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 analogue segment, and sales of analogue semiconductors will represent almost 50 per cent of TI's revenue.

Steve Ohr, an analogue 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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