Texas Instruments Inc. (NASDAQ: TXN) is set to purchase Silicon Laboratories, Inc. (NASDAQ: SLAB) in an all-cash deal valued at roughly $7.5 billion. This transaction notably enhances Texas Instruments' presence in the semiconductor market by incorporating Silicon Labs' embedded wireless connectivity solutions into its portfolio.
Shareholders of Silicon Laboratories will receive $231 in cash for each share they hold when the acquisition closes. The payment method involves a combination of Texas Instruments’ available cash reserves and arranged debt facilities, with no condition on financing attached to the deal.
The companies anticipate completing the transaction during the first half of 2027, contingent on the satisfaction of regulatory approvals and standard closing conditions. As reported on December 31, Texas Instruments held $3.2 billion in cash and cash equivalents, indicating substantial liquidity to support this acquisition.
Haviv Ilan, chairman, president, and CEO of Texas Instruments, stressed the strategic value of this acquisition, highlighting that Silicon Labs’ advanced embedded wireless connectivity IP and technology will amplify Texas Instruments' capabilities. Mr. Ilan noted that their proprietary technology and manufacturing processes align well with Silicon Labs’ portfolio, which positions them to offer customers a dependable supply chain on a global scale.
The acquisition will add approximately 1,200 products that support various wireless standards and protocols, significantly broadening Texas Instruments’ offerings in mixed-signal and embedded solutions. Combining the two companies' strengths is projected to foster innovation, expand market reach, and deliver enhanced solutions to existing and future customers.
From an operational perspective, the deal is expected to yield around $450 million in annual manufacturing and operational synergies within three years after closing, excluding costs directly related to the transaction. Moreover, the acquisition is anticipated to contribute positively to Texas Instruments' earnings per share starting from the first full fiscal year following consummation.
On the earnings front, Silicon Laboratories recently disclosed its fourth quarter adjusted earnings per share at 56 cents, surpassing analyst consensus estimates of 55 cents. Revenues for the quarter amounted to $208.2 million, also slightly above the expected $207.6 million.
Following the announcement, trading activities showed a marked contrast between the involved entities; Silicon Laboratories' shares surged 49.32% in premarket trading, reaching $204.00, whereas Texas Instruments’ shares experienced a decline of 3.83% to $216.58 during the same period.
This transaction stands as a significant move in the semiconductor industry, uniting Texas Instruments’ analog and embedded processing dominance with Silicon Labs’ wireless connectivity specialization, creating a comprehensive platform aimed at addressing diverse customer needs and market demands.