Texas Instruments to buy National Semiconductor for $6.5 billion

By Ken Sweet, contributing writer


NEW YORK (CNNMoney) -- Texas Instruments said late Monday that it has agreed to buy rival National Semiconductor for $6.5 billion in cash.

The deal would make Texas Instruments one of the world's largest makers of analog technology components, which are used to convert real-world information, like sounds, into digital signals.

Under the terms of the deal, Texas Instruments will pay $25 a share for National Semiconductor -- a 78% premium to National Semiconductor's share price of $14.07 as of Monday's close. Texas Instruments said it will fund the deal through a combination of cash on hand and company-issued debt.

TI estimates that the market for analog semiconductors was a $42 billion industry in 2010, and says it held around 14% of the market. National Semiconductor controls around 3%.

"Our share in the analog sector is still modest and we have room to grow," said TI's CEO Rich Templeton in a conference call with investors. "This transaction is part of our strategy."

The companies said the deal would combine their complementary product portfolios and increase National Semiconductor's sales position by giving it access to Texas Instrument's large sales force. In exchange, TI gets access to National Semiconductor's portfolio of industrial products.

Templeton said he expects the deal will be accretive to earnings in the first year, and will make analog semiconductors sales account for around 50% of TI's annual revenue.

National Semiconductor was not looking to sell itself, but Texas Instruments' unsolicited offer was too generous to turn down, National's CEO, Don Macleod, told investors.

The deal is expected to close in six to nine months, pending regulatory and shareholder approvals, the companies said. TI said it does not expect any major regulatory hurdles.

Shares of National Semiconductor (NSM) and Texas Instruments (TXN, Fortune 500) were halted in after-market trading. Shares of National Semiconductor have gained 2.3% so far this year before the deal was announced, while Texas Instruments' shares are up 5% year-to-date. To top of page

Just the hot list include
Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 25,162.41 -137.51 -0.54%
Nasdaq 7,774.12 -96.78 -1.23%
S&P 500 2,818.37 -21.59 -0.76%
Treasuries 2.85 -0.04 -1.49%
Data as of 7:12am ET
Company Price Change % Change
Citigroup Inc 68.65 -1.36 -1.94%
Verizon Communicatio... 53.24 0.37 0.70%
Exxon Mobil Corp 76.94 -1.37 -1.75%
Boston Scientific Co... 34.89 1.19 3.53%
Marathon Oil Corp 19.00 -1.45 -7.09%
Data as of Aug 15

Sections

Elon Musk said Monday that Goldman is helping Tesla as it tries to go private. More

The median pay for chief executives of the 100 most valuable companies on the London Stock Exchange increased 11% last year to £3.9 million ($5 million). Workers got a 2% hike. More

Verizon wants 5G to become a serious competitor to broadband internet. It thinks free TV will give 5G the boost it needs. More

The key to negotiating a salary is knowing your value. That way you can feel confident in how much to ask for. More