ON Semiconductor buys legendary chip maker Fairchild for $ 2.4 billion

    The company ON Semiconductor announced the acquisition of one of the oldest American chip manufacturers The Fairchild Semiconductor International,. From a statement by ON Semiconductor it follows that the company will pay about $ 2.4 billion for Fairchild. The price per share was $ 20, which is 12% more than the exchange value of one Fairchild security at the time the exchange closed on Tuesday, November 17. On Wednesday, before the start of trading, Fairchild shares were worth $ 19.4 apiece (as of 15:00 Moscow time).

    The deal is scheduled to close in the second quarter of 2016.

    The financial advisors to ON Semiconductor are Deutsche Bank and BofA Merrill Lynch , and their legal adviser isMorrison & Foerster . Fairchild is advised by Goldman Sachs and Wachtell, Lipton and Rosen & Katz . ON Semiconductor expects to finance the transaction with its own funds and a new loan. In 2014, the company's revenue amounted to $ 3.6 billion.

    As a result of the transaction, the industry will receive a new leader in the segment of power semiconductor solutions with annual revenues of about $ 5 billion. The company’s diversified offer will highlight three strategic areas: automotive electronics, industrial electronics and smartphones.

    A strong competitor to ON Semiconductor is the Chinese company Tsinghua , which is one of the three largest manufacturers in the industry. In the next five years she will invest300 billion yuan ($ 47 billion) in this area.

    In August, Tsinghua Unigroup made an informal offer to buy US Micron's Technology Inc . However, it was rejected. In general, the Chinese organization has spent more than $ 9.4 billion on investments and acquisitions, including the purchase of shares in the US over the past two years, Western Digital Corp and Taiwan's Powertech Technology Inc . It recently announced the investment of $ 3.775 billion in Western Digital.

    Fairchild develops semiconductor power management solutions for electronic devices, automotive chips, and electronic signal converters. Founded in 1957, the company is considered one of the oldest chip manufacturers in the United States. In 1959, an American company for the first time in the world created an integrated circuit suitable for mass production, and was one of the key firms in Silicon Valley in the 1960s.

    In 1979, the Schlumberger oilfield service company acquired Fairchild Semiconductor. In 1987, National Semiconductor bought Fairchild Semiconductor from Schlumberger. Fairchild Semiconductor became an independent company again in 1997. Since 1999, the company has been trading on the New York Stock Exchange.

    According to Thomson Reuters, this year the total amount of M&A transactions (mergers and acquisitions) in the semiconductor industry reached $ 80 billion. Experts believe that further consolidation will take place in the industry.

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