Silicon Laboratories, Inc. (NASDAQ:SLAB) shares are trading higher premarket on Wednesday after the company disclosed it will be acquired by Texas Instruments (NASDAQ:TXN) in an all-cash deal of about $7.5 billion.
Acquisition Terms
As per the terms, Texas Instruments will pay Silicon Labs shareholders $231 in cash for each share they own at closing.
Texas Instruments plans to finance the acquisition using a mix of cash on hand and arranged debt, with no financing contingency.
The transaction is expected to close in the first half of 2027, pending regulatory approvals and customary closing conditions.
As of December 31, Texas Instruments' cash and cash equivalents stood at $3.2 billion.
"Silicon Labs' leading embedded wireless connectivity portfolio enhances our technology and IP, enabling greater scale and allowing us to better serve our customers. Texas Instruments' industry-leading and internally owned technology and manufacturing is optimized for Silicon Labs' portfolio, and will provide customers dependable supply worldwide," Haviv Ilan, chairman, president, and chief executive officer of Texas Instruments said.
Synergies
The deal adds roughly 1,200 products supporting multiple wireless standards and protocols to Texas Instruments' portfolio.
The acquisition will merge Silicon Labs' strengths in mixed-signal solutions with Texas Instruments' top-tier analog and embedded processing portfolio and proprietary technology and manufacturing capabilities.
The combined entity is expected to accelerate growth by offering greater innovation and broader market access to current and prospective customers.
Excluding transaction-related costs, the acquisition is projected to be accretive to Texas Instruments' earnings per share in the first full year after closing.
Also, the buyout is projected to deliver about $450 million in annual manufacturing and operational synergies within three years of closing.
Earnings Snapshot
Today, in a separate release, Silicon Labs reported fourth quarter adjusted EPS of 56 cents, which exceeded the consensus of 55 cents, and sales of $208.2 million exceeded the street view of $207.6 million.
Price Action: Texas Instruments shares were down 3.83% at $216.58, and Silicon Laboratories shares were up 49.32% at $204.00 during premarket trading on Wednesday, according to Benzinga Pro data.
Photo by Shutterstock
