ON Semiconductor and Fairchild Semiconductor have announced that they have entered a definitive agreement for ON Semiconductor to acquire Fairchild for $20.00 per share in an all cash transaction valued at approximately $2.4 billion. The acquisition will create a leader in the power semiconductor market with combined revenue of approximately $5 billion, diversified across multiple markets with a strategic focus on automotive, industrial and smartphone end markets. The plan is to bring together two companies with complementary product lines to offer customers the full spectrum of high, medium and low voltage products.
As part of ON Semiconductor, Fairchild will continue to pioneer technology to help their customers achieve success and drive value for our partners and employees around the world.
The transaction is expected to be immediately accretive to ON Semiconductor’s non-GAAP earnings per share and free cash flow, excluding any non-recurring acquisition related charges, the fair value step-up inventory amortization, and amortization of acquired intangibles. ON Semiconductor anticipates achieving annual cost savings of $150 million within 18 months after closing the transaction.
The transaction is not subject to a financing condition. ON Semiconductor intends to fund the transaction with cash from the combined companies balance sheet and $2.4 billion of new debt. The debt financing commitment also includes provisions for a $300 million revolving credit facility which will be undrawn at close. ON Semiconductor remains committed to its share repurchase program, and the agreed upon financing provides flexibility to continue share repurchases going forward.