Texas Instruments Prices $500M Senior Notes - Analyst Blog


Texas Instruments ( TXN ) or "TI", the largest manufacturer of analog semiconductor products, has recently announced the pricing of senior unsecured notes aggregating $500 million. These bonds have been issued in two tranches of same amounts but with varying coupon rates and maturities. The offering is expected to close on Mar 12, 2014, subject to customary closing conditions.

The first and second tranches of $250 million each, carrying a coupon rate of 0.875% and 2.750%, are due to mature in 2017 and 2021, respectively.

Citigroup Global Markets Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Mizuho Securities USA Inc., J.P. Morgan Securities LLC, Mitsubishi UFJ Securities (USA), Inc. and Morgan Stanley & Co. LLC, will act as joint book-running managers for the offering. Texas Instruments stated that the proceeds would be used for repaying outstanding debt.

TI remains one of the best positioned analog companies, given its compelling product line, the increased differentiation in its business and lower-cost 300-mm capacity. In the recently reported quarter, the company spent $326 million on cash dividends and used $734 million to repurchase its common stock.

At quarter-end, TI had $4.16 billion in long-term debt and $1.00 billion in short-term debt. During the quarter, the net debt position declined $239 million. It also had net underfunded retirement plans of $86 million. The issuance of these notes will increase the company's total debt to $5.66 billion from $5.16 billion, taking the debt-to-total capitalization ratio to 34.4%. 

We believe strong balance sheet will help Texas Instruments to capitalize on investment opportunities and make strategic acquisitions, further improving its growth prospects. We believe the senior notes offering will bring down its cost of capital, thus strengthening the balance sheet and supporting future growth.

Currently, TI has a Zacks Rank #3 (Hold). Other stocks that are performing well currently are Carnival Corp. ( CCL ) , Six Flags Entertainment Corporation ( SIX ) and SFX Entertainment Inc. ( SFXE ). All these stocks carry a Zacks Rank #2 (Buy).

CARNIVAL CORP (CCL): Free Stock Analysis Report

SFX ENTMT INC (SFXE): Free Stock Analysis Report

SIX FLAGS ENTMT (SIX): Free Stock Analysis Report

TEXAS INSTRS (TXN): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: USA , CCL , SFXE , SIX , TXN



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