Let’s look at the businesses, financials, product portfolios, and end markets of NXP Semiconductors and Qualcomm to understand what the combined company would look like.
Looking at revenue synergies, we see that Fairchild’s strong portfolio in the high voltage and medium voltage power semiconductor market complements ON’s low voltage and small-signal market.
The March 2016 earnings season was seasonally slow for the power semiconductor market. The biggest pending merger in the market is between Fairchild Semiconductor (FCS) and ON Semiconductor (ON).
Unisplendour backed out of the deal to acquire a 15% stake in Western Digital for ~$3.8 billion. Investors wondered if the merger deal would come through.
ON Semiconductor’s stock has a market capitalization of $3.10 billion. Its PE ratio of 29.19x is higher than rival Texas Instruments’ (TXN) ratio of 18.61x but lower than STMicroelectronics’ (STM) ratio of 45.68x.
In fiscal 2015, Fairchild’s cash from operating activities fell by 51% YoY to $94.4 million. That year, the company spent $96 million on share buybacks.
The demand for industrial semiconductors will be driven by the LED (light-emitting diodes) lighting sector, security, energy management, and medical devices.
Renesas and Infineon, which currently hold the top ranks in the automotive semiconductor space, will lose market share to the NXP-Freescale merged company.
Microsemi has made a third offer for the acquisition of PMC-Sierra, increasing the cash component. The revised offer values PMC-Sierra at $12.05 per share.
On November 18, 2015, Fairchild announced its acquisition by ON Semiconductor for a total cash consideration of $2.4 billion. The deal values Fairchild at $20 per share.
