Texas Instruments (TXN) has announced that it is acquiring microchip designer Silicon Laboratories (SLAB) for $7.5 billion U.S.
In a news release, Texas Instruments said the deal will expand its footprint in wireless connectivity microchips that are used for industrial and consumer applications.
The purchase of Silicon Laboratories is Texas Instruments’ biggest acquisition since its $6.5 billion U.S. purchase of National Semiconductor in 2011.
Unlike artificial intelligence (A.I.) microchip developers such as Nvidia (NVDA), Texas Instruments focuses on foundational chips and processors that are used in everyday devices such as smartphones and motor vehicles.
Clients of Texas Instruments include companies ranging from Apple (AAPL) to Ford Motor Co. (F).
Texas Instruments said it will acquire Silicon Laboratories for $231 U.S. per share, implying a premium of about 69% to the stock’s last closing price on Feb. 3.
Under terms of the deal, Silicon Labs will pay a $259 million U.S. termination fee if it walks away from the deal, while Texas Instruments will pay $499 million U.S. if it abandons the acquisition.
The stock of Silicon Laboratories is up 51% on news that it is being acquired, while Texas Instruments’ share price is down 4%.
Over the past 12 months, TXN stock has risen 25% to trade at $225.21 U.S. per share.
