Texas Instruments announced on Wednesday that it will acquire Silicon Laboratories in a transaction valuing the chip designer at $7.5 billion. The purchase, aimed at expanding Texas Instruments' footprint in wireless connectivity semiconductors used across industrial and consumer applications, will see Silicon Laboratories shareholders receive $231 per share.
The $231 per share offer represents roughly a 69% premium to Silicon Laboratories' last unaffected closing price on Tuesday, when talks of the transaction first emerged. Following the announcement, Silicon Laboratories' stock surged about 51% in premarket trading, while Texas Instruments' shares declined approximately 3.5%.
For Texas Instruments, best known for its strength in analog chips that control signals and power in electronic equipment, the acquisition is the company's largest since its $6.5 billion purchase of National Semiconductor in 2011. Unlike firms focused on AI accelerators, Texas Instruments concentrates on foundational chips deployed in everyday devices - from smartphones and automobiles to medical instruments - and serves a broad client base that includes Apple, SpaceX and Ford Motor.
Silicon Laboratories has been refining its business mix in recent years. In 2021 it sold certain automotive chip assets and other product lines to Skyworks Solutions for $2.75 billion. That divestment was framed as a move to concentrate on semiconductors for connected devices such as smart home products, power meters and connected industrial equipment that gather data to enhance efficiency.
Under the terms of the acquisition agreement, either party faces contractual termination fees should the deal not close: Silicon Laboratories would owe $259 million if it abandons the agreement, while Texas Instruments would be required to pay $499 million if it walked away.
Goldman Sachs is serving as the exclusive financial adviser to Texas Instruments on the transaction. The companies expect the deal to close in the first half of 2027. Texas Instruments plans to fund the purchase with a combination of cash on hand and debt.
Management projects that the acquisition will produce about $450 million in annual manufacturing and operational savings within three years following deal close. The anticipated cost synergies are presented as part of the financial rationale for bringing Silicon Laboratories into Texas Instruments' portfolio.
Impacted sectors:
- Semiconductor manufacturing and design
- Connected industrial equipment and consumer smart devices
- Automotive electronics and medical device suppliers