Texas Instruments To Acquire National Semiconductor For $25/Share, 80% Premium

Tyler Durden's picture

Yet another notable deal, with an 80% premium, to be funded by cash and debt. Mostly debt. Very cheap debt.

Press Release:

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.

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Highrev's picture

Very cheap debt.

To be paid back with even cheaper dollars!


That's the name of the game. Jump on Ben's Bandwagon now before it's too late!



johnQpublic's picture

funded by debt


that is an oxymoron isn't it?

i just cant get by the thought of funding something with a negative.....just no future for me in economics

Hard1's picture

Right, when both cash and debt are both free and worthless, It doesn't matter what premium you paid, you just made a killer deal, getting something for nothing. 

ZeroPower's picture

Would be very interesting to match the T&S on NSM during the last 3 minutes of trade - crazy volume, much larger than average and not only due to it being end of day liquidity burst.

No frontrunning. No, not ever.

Tyler Durden's picture

Really? We were under the impression debt means debt: "TI expects to fund the transaction with a combination of
existing cash balances and debt." Thanks for the correction.

Thomas's picture

I did a little analysis of the balance sheets on the DOW. Almost twice as much debt as cash. Most analysts think that a line of credit is "as good as cash." Thus, those amazing corporate balance sheets aren't really so amazing afterall. Go figure.

Highrev's picture

It won't be long until it's considered cash flow.



Rogerwilco's picture

Like the "cash flow" banks generate today from neg-am mortgages? Write enough of 'em and the board can declare some sick bonuses up and down the line.

Hephasteus's picture

Ya but TI is co-signing the loan which neither party can pay back. Hopefully that will work better than a Blythe Masters silver hedge.

mule65's picture

All cash as far as NSM shareholders are concerned.

homersimpson's picture

Yes I'm sure you'd trade me your cash for IOUs *rolls eyes*

trav7777's picture

Debt IS cash, nigga

Well ain't it???

Id fight Gandhi's picture

Anyone see any funny options action?

mule65's picture

Looks pretty clean to me.

sabra1's picture

so, if everyones in debt, we can buy more stuff?

Id fight Gandhi's picture

Still cheaper than buying chipole or price line. You'd need deep pockets for buying them out.

disabledvet's picture

i agree with that.  which means "more up, up and away" for these two.  "where angels fear to tread" there's always a "hey! you over there!  start...

SwingForce's picture

Incredible new way to get stocks to rise. Was this technique available in 2009?

Sudden Debt's picture


I even heard they have some with SOLAR POWER!!



Thomas's picture

They can now even do square roots.

InconvenientCounterParty's picture

TI has a new calulator for banking applications. Whenever a negative number appears, just hit the "innovate" button. Apparently "innovate" is a new math operator of some sort.

Hephasteus's picture

People to make up numbers. Calculators to pretend they weren't made up. It's the perfect merger of liar and machine.

Steve Wozniak once said that computers were like bicycles for the mind. They allowed people to be more efficient.

If the mind's a liar. The bicycle still works.

SgtSchultz's picture

I hear the next big thing in calculators is a Roman numeral version - no bothersome negative numbers. 

Long-John-Silver's picture

How would ZH filter without negative numbers?

dogismyth's picture

SOS...more consolidation with zero consideration for competition and antitrust laws.  Blackrock once again major holders in both entities.  But I'm sure its all coincidental.

Spalding_Smailes's picture

But, but .... I thought this was a depression ?

Do they not have any advisors who have buried canned food, cases of bottled water, tons of potatoes on said staff ....

This is crazy with 2012 right around the corner .... Lol

Tyler Durden's picture

Actually the game is called "get your cheap debt financing while rates are still low."

Sudden Debt's picture

I was actually thinking about getting a loan once to buy more PM's, but even when I'm a believer, that's still one step to far for me.


magpie's picture

Hope you didn't offer your PMs as collateral...

DosZap's picture


The devil made you think it.

Smart move NOT doing a dumb move.

Spalding_Smailes's picture

Did you junk me too ? 


Come on, this is the best time for securing said debt .....


What's the worst that could happen ? Joe Six Pack and Wendy Wine Cooler have their backs ....

taraxias's picture

You're a junkoholic fucktard. That's the only reason you post.

"but, but, but why are you junking me, you all know I'm an asshole"

Spalding_Smailes's picture

Hey look, its a real corn-fed moron !!!


I get junk'd by the doomer sect, big fucking deal, 7-10 morons with gold and silver stocks, pepperoni in the crawl space and end the fed bumper stickers. I bet your whore mother got a tramp stamp for her 50th birthday above her ass that say .. " Open House Party "

NidStyles's picture

At least we know the difference between past and present tense.

It's also amusing that you can so categorically say everyone that has seen certain evidence of rough economic times ahead is a moron. Let me guess, you don' think you'll have any difficulty with the aspect of war breaking out all over the little area that support's the majority of your dietary and consumption based need's?

I guess you never sat down and wondered how those acre's of food, that you shove down your throat, came to be. I'm sure the farmer's will be willing to trade you stock option's for food. That is, just as soon as you get out there in the field and start sowing the field's.


Nope, we are the moron's that actually know that mash oil is mixed in with fertilizer to increase the Nitrification of the soil. The same people that are also aware that tractor's are fuelled by diesel.

filletandrelease's picture

I am new to trading, will salsa stocks go up in sympathy with the chip stocks?

Sudden Debt's picture

to dip or not to dip, that's dips.

mynhair's picture

Just BTFD.  It's all good.

Ben Graham Redux's picture

Two losers go to bed together - big deal.  National Semi has been dead for decades - TI just a bit of life left.

DoChenRollingBearing's picture

I guess I have to sell my Texas Instruments now too.  So few attractive stocks to buy out there.


Ruffcut's picture

This M & A activity has some validity, but the markets like to do these deals to inflate values and make nice coin to front run it, high fees and able to print money through fractional reserve lending.

"what happened to those good ole deals?"

Good deals for them, but bad for 300 million of the rest of us.

hack3434's picture

Why stop at 80% premium? good lord...

eatthebanksters's picture

the big consolidate and get bigger...is there any possibility that the midsized and smaller players can compete anymore? Whatever happened to the economic theory of perfect competition?  Down what road is our government taking us?

Rogerwilco's picture

Same sentiment, better delivery (IMHO):


And all the roads jam up with credit
And there's nothing you can do
It's all just bits of paper
Flying away from you
Look out world take a good look
What comes down here
You must learn this lesson fast
And learn it well
This ain't no upwardly mobile freeway
Oh no, this is the road to Hell

drink or die's picture

I follow the analog semis pretty close (I work for one), and I believe NSM has recovered the WORST out of all the major players from the dip in 2008. 


A cheap deal for TXN, but there is a reason they have done so poorly over the past 2 years...

lieutenantjohnchard's picture

back in the paper ticket days i almost made an error placing a trade fror texas instruments. put on the ticket tex vs txn. saved by the wire operator.