The TI-National Semi Deal:

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 facilities.''

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 percent of
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 utilization.''

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 2010."