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TI buys Burr-Brown
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June 21, 2000: 7:52 p.m. ET
Texas Instruments in all-stock deal for chipmaker valued at $7.6B
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NEW YORK (CNNfn) - Texas Instruments agreed to acquire Burr-Brown Corp. Wednesday for $7.6 billion in stock, bolstering its efforts to establish a commanding position in the high-performance analog chip sector.
With the acquisition, TI (TXN: Research, Estimates), already the world's leading designer and supplier of digital signal processors (DSPs) and analog integrated circuits, also becomes a leading provider of high-performance data converters.
"They were fifth, and this would bring them up to No. 2 in the converter world," said Will Strauss, an analyst at semiconductor research firm Forward Concepts.
"Certainly in the high-performance side, this gives them a lot of strength. They had a lot of commodity market products that they were shipping a lot of volume in, but at the more lucrative high-end of the market, Burr Brown is a good match for them," Strauss said.
 DSPs are microprocessors designed to work with analog signals, such as video and audio, which have been digitally encoded. They are used in a wide range of electronics, including digital cellular phones and high-speed Internet access devices.
Forward Concepts forecasts that the market for DSPs will grow from $4.4 billion in 1999 to $10.9 billion in 2003.
As part of an aggressive strategy aimed at widening the gap between it and its nearest competitors, TI has been using strength in the DSP market to fortify its position on the analog front, Strauss said.
DSPs work hand-in-hand with analog chips, and the company's DSP and analog design teams have been working together to develop matching analog and DSP solutions.
With the acquisition of Burr Brown's chips that are used to convert analog signals to a digital format and vice versa, executives at TI said they will round out that portfolio of products.
 Texas Instruments will swap 1.3 shares of its common stock for each share of Burr-Brown. Based on Burr-Brown's closing price Wednesday of 72-5/8, the deal represents a 56 percent premium for the company's shareholders.
The transaction should begin adding to TI's earnings in 2002, and it will not have a material effect between now and then, Bill Ayelsworth, TI's chief financial officer, said in an interview on CNNfn's Moneyline News Hour Wednesday. [206K WAV or 206K AIFF]
Tucson, Ariz.-based Burr-Brown (BBRC: Research, Estimates) had sales in 1999 of $291 million and earned nearly $46 million. The company has about 1,500 employees.
In after-hours trading, shares of Burr Brown soared more than 40 percent, rising 29-3/8 to 102. Prior to the announcement, Dallas-based TI fell 4-7/8 to 82 in trading on the New York Stock Exchange. 
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