Key Moments
- Texas Instruments agreed to acquire Silicon Laboratories in a transaction valuing the chip designer at $7.5 billion.
- The deal values Silicon Labs at $231 per share, representing an implied premium of about 69% to its last unaffected closing price on Tuesday.
- Termination terms include a $259 million fee if Silicon walks away and a $499 million fee if Texas Instruments abandons the deal.
Strategic Move into Wireless Connectivity
Texas Instruments on Wednesday reached an agreement to acquire Silicon Laboratories in a deal that values the chip designer at $7.5 billion, according to Reuters on Feb 4. The transaction is intended to broaden Texas Instruments’ presence in wireless connectivity chips that serve both industrial and consumer markets.
Texas Instruments’ core business centers on analog chips that control signals and power in electronic devices. The pursuit of Silicon Labs reflects a push to strengthen its position in areas tied to connected products and wireless technologies.
Largest Texas Instruments Acquisition Since 2011
The pending purchase represents Texas Instruments’ most significant acquisition since its $6.5 billion takeover of National Semiconductor in 2011. It underscores the company’s continued strategy of expanding through targeted deals in complementary chip segments.
Unlike AI-focused chip makers such as Nvidia and AMD, Texas Instruments emphasizes foundational semiconductors that power everyday items, including smartphones, automobiles and medical equipment. This focus has helped establish a broad customer base that includes Apple, SpaceX and Ford Motor.
Deal Valuation, Premium and Market Reaction
Under the agreement, Texas Instruments will acquire Silicon Labs for $231 per share. This price implies a premium of about 69% over Silicon Labs’ last unaffected closing level on Tuesday, the day when reports first surfaced about the ongoing deal talks.
Following the announcement, Silicon Labs’ shares climbed 24% in premarket trading, while shares of Texas Instruments fell 3.5%.
| Metric | Value |
|---|---|
| Transaction value | $7.5 billion |
| Per-share purchase price | $231 |
| Implied premium to last unaffected close | About 69% |
| Silicon Labs premarket move | Up 24% |
| Texas Instruments premarket move | Down 3.5% |
Silicon Labs’ Portfolio Shift and Focus
Silicon Labs had previously streamlined its business by selling certain automotive chip assets and other operations to Skyworks Solutions for $2.75 billion in 2021. The divestiture was designed to refine its focus on semiconductors used in connected devices.
Those efforts centered on chips for smart home systems, smart power meters and connected industrial equipment that gather data to enhance efficiency. The emphasis on connected devices aligns with the wireless connectivity capabilities Texas Instruments aims to deepen through this acquisition.
Termination Fees and Deal Protections
The agreement includes reciprocal termination provisions. If Silicon Labs decides to withdraw from the transaction, it would be required to pay a $259 million breakup fee. Conversely, if Texas Instruments opts to terminate the deal, it would owe Silicon Labs $499 million.
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