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Texas Instruments to Buy National Semiconductor for $6.5 Billion in Cash (TXN, NSM)

Posted: 4/5/2011 8:30:00 AM
Referenced Stocks: NSM;TXN

Texas Instruments Incorporated ( TXN ) late Monday announced it has entered into an agreement to buy rival analog chipmaker National Semiconductor Corporation ( NSM ) for $6.5 billion in cash.

The merger will create perhaps the third largest analog chipmaker in the world with a 4.5% market share. Texas Instruments CEO Rich Templeton said in a statement that "This acquisition is about strength and growth. National has an excellent development team, and its products combined with our own can offer customers an analog portfolio of unmatched depth and breadth."

The $25 per-share asking price represents a massive 78% premium over NSM's Monday closing price of $14.07, and has some industry analysts scratching their heads over the seemingly high valuation.

Texas Instruments shares fell $1.17, or -3.4%, in premarket trading Tuesday.

The Bottom Line
Shares of Texas Instruments ( TXN ) have a 1.52% dividend yield, based on last night's closing stock price of $34.11. The stock has technical support in the $28-$32 price area. If the shares can firm up, we see overhead resistance around the $36-$37 price levels.

Texas Instruments Incorporated ( TXN ) and National Semiconductor Corporation ( NSM ) are both rated "Neutral," holding a DARS™ Rating of 3.4 and 3.2 out of 5 stars, respectively.

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