As reported, Texas Instruments Inc. signed a
definitive merger agreement to acquire National Semiconductor Corp. for $6.5
billion in cash, the company said Monday (April 4).
Here's what analysts were saying about the deal:
Craig Berger, an analyst with FBR, said: ''We think this deal makes
sense, with TI the only likely bidder and the best strategic fit for National
Semi. The $6.5B purchase price (is) not inexpensive considering National's
growth rate, but likely not that expensive either considering the manufacturing
synergies and cost reductions that TI is likely to achieve in coming years.
Indeed, TI is now an even bigger analog competitor than before with TI and
National combining to claim about 18 percent global analog market share,
meaningfully ahead of closest peers Analog Devices (6 percent), Maxim (6 percent),
Linear Technology (4 percent), and Intersil (4 percent).
One main motivation for this deal is that it adds about 12,000 new parts to
TI's analog product stable.While TI said that it is likely to keep using
National's 150-mm and 200-mm fabs given their mid-60% utilization rates and low
manufacturing costs, we believe a real cost opportunity exists for TI to slowly
move National's production out of those facilities and into TI's 300-mm
Bobby Burleson, an analyst with Canaccord Genuity, said: ''We continue
to rate TXN shares 'HOLD' given our view that investors are likely to gravitate
toward product cycle stories at this point in the semiconductor cycle. Product
overlap is minimal as TXN's analog portfolio focuses primarily on the
communications and computing markets (64 percent of 2010 revenue) and
industrial is the largest market for NSM (46 percent of 2010 revenue).
Following the completion of the acquisition, analog will account for almost 50
Texas Instruments revenue.
Management would like to reverse share loss seen recently for certain NSM
product areas (wireless) and deliver growth for NSM product commensurate to its
own goal of 2x the industry. The company also expects to benefit from NSM's
manufacturing operations, which are running at approximately 60 percent
Market research house IHS iSuppli, said: ''Based on final results from
the year 2010, the National acquisition would make Texas Instruments the world's
third largest semiconductor company. This would allow Texas Instruments to rise
one place in the rankings from fourth place, supplanting Japan's Toshiba Corp.
With in the analog segment, the acquisition will particularly bolster Texas
Instruments lead in the market for voltage regulators. Texas Instruments was
the leading voltage regulator supplier in 2010, with $1.7 billion in revenue
and a share of 18.1 percent. National was the third largest supplier, with $758
million in revenue and 15.2 percent in revenue. With the acquisition, Texas
Instruments' voltage regulator revenue would amount to $2.4 billion in 2010,
giving it a 26.5 percent share of the market.
The acquisition also will bolster Texas Instruments' dominant position in
another segment of the analog market: analog/comparator integrated circuits.
Texas Instrument in 2010 earned $932 million in analog/comparator revenue,
giving it a 24.6 percent share of the market.''
IMS Research said: Texas Instruments' acquisition of National
Semiconductor for $6.5 billion will create a giant that dominates the power IC
field, according to IMS Research.The combination of these two titans will
represent about 17 percent of the power management and driver IC market, or
$2.2 billion in revenue, whilst their share of the LED IC market will stand at
over 25 percent.
† IMS Research senior power analyst Ryan Sanderson commented: "Assuming that the
deal is waived through by the regulators, TI, once it completes the acquisition
and integration of National, would have just over twice the market share of #2
ranked Infineon, assuming previous years' results."
The merger will also consolidate the two companies' leadership positions in
some emerging areas such as LED driver ICs. IMS Research ranked TI and National
#1 and #2 respectively in 2010 and the combined share of the new company is
estimated at 26 percent.
Jamie Fox, senior LED lighting analyst at IMS Research, commented: "We estimate
that TI held around 19 percent of this market in 2010, whilst National took 7
percent. The new combined company will be four times bigger than its nearest
competitor in this high growth market, which was worth nearly $1 billion in