Texas Instruments (NASDAQ: TXN) has announced its acquisition of Silicon Labs (NASDAQ: SLAB) for $231.00 per share in an all-cash transaction, totaling approximately $7.5 billion in enterprise value. This strategic move is expected to enhance Texas Instruments' global leadership in embedded wireless connectivity solutions and generate approximately $450 million of annual manufacturing and operational synergies within three years post-close.
The acquisition is projected to position Texas Instruments as a leading provider of embedded wireless connectivity solutions with the addition of approximately 1,200 products from Silicon Labs, supporting various wireless connectivity standards and protocols. Furthermore, the transaction is set to leverage Texas Instruments' industry-leading, dependable, and low-cost manufacturing capacity, reshoring Silicon Labs' manufacturing and optimizing Texas Instruments' defined process technologies for more efficient and faster future process technology design cycles.
In terms of financial benefits, the transaction is expected to deepen customer engagement through reach of market channel and cross-sell opportunities, as well as deliver substantial synergy opportunity with an estimated $450 million in annual manufacturing and operational synergies within three years post-close.
The transaction is anticipated to close in the first half of 2027, subject to regulatory approvals and customary closing conditions, including approval by Silicon Labs stockholders. Texas Instruments remains committed to its capital return strategy, aiming to return 100% of free cash flow to shareholders over time via dividends and share repurchases.
Goldman Sachs & Co. LLC is serving as exclusive financial advisor to Texas Instruments, while A&O Shearman is serving as legal counsel, and Joele Frank, Wilkinson Brimmer Katcher is serving as strategic communications advisor. On the other hand, Qatalyst Partners is serving as exclusive financial advisor to Silicon Labs, with DLA Piper as legal counsel and FGS Global as strategic communications advisor.
In connection with the proposed transaction, Silicon Labs plans to file a proxy statement with the Securities and Exchange Commission for obtaining stockholder approval. Texas Instruments and Silicon Labs, along with their respective directors and executive officers, may be deemed participants in the solicitation of proxies in respect of the proposed transaction.
The transaction is not subject to any financing contingency and is expected to be accretive to Texas Instruments' earnings per share, excluding transaction-related costs, in the first full year post-close. As a result of these announcements, the company's shares have moved -2.67% on the market, and are now trading at a price of $148.74. For the full picture, make sure to review SILICON LABORATORIES INC.'s 8-K report.
