ON Semiconductor Purchases 15.32 Billion Fairchild Semiconductor

Following Fairchild’s (Left) disclosure last month, ON Semiconductor (right) announced that the two parties have reached an agreement with ON Semiconductor to acquire nearly RMB 15.32 billion.

ON Semiconductor and Fairchild Semiconductor International have jointly announced that they will reach a definitive agreement. ON Semiconductor will acquire Fairchild Semiconductor for US$20 per share in cash. The entire cash transaction is approximately 2.4 billion. The United States dollar (a total of 15.3 billion yuan). The acquisition creates a global leader in the power semiconductor market. The combined revenue is about $5 billion. The business is diversified and involves multiple market segments. Strategically focused markets include the automotive, industrial and smart phone terminals.

Keith Jackson, president and CEO of ON Semiconductor, said: “The combination of ON Semiconductor and Fairchild has created a strong power semiconductor leader in the rapidly integrated semiconductor industry. Our plan will be two The company's complementary product lines combine to provide its customers with a full range of high, medium and low voltage products.Elevated earnings per share and the future significantly increase the potential of ON Semiconductor’s free cash flow, enabling Fairchild’s acquisition of ON Semiconductor. For semiconductor shareholders, it is a very good opportunity."

Mark Thompson, Chairman and CEO of Fairchild Semiconductor, said: "As part of ON Semiconductor, Fairchild will continue to lead the development and innovative design of energy-efficient power supplies to help customers succeed and cooperate with us globally. Partners and employees create value. We will work closely with ON Semiconductor to ensure the smooth completion of the transaction. "

Upon completion of the transaction, ON Semiconductor's non-GAAP earnings per share and free cash flow are expected to increase immediately, excluding any non-recurring related M&A expenses, as well as fair value increases in inventory amortization and depreciation of acquired intangible assets. It is expected that ON Semiconductor can save US$150 million in costs each year within 18 months of the completion of the transaction.

The transaction is not affected by the financing situation. ON Semiconductor plans to include the cash required for the acquisition and an increase of $2.4 billion in liabilities on the combined company’s balance sheet. Debt financing includes the upcoming $300 million revolving credit facility. ON Semiconductor will continue to support its share repurchase program, and the agreement reached in the financing of this acquisition will provide more flexibility for the continued implementation of stock repurchases.

Acquisition offer and deal

Under the terms of the definitive agreement, ON Semiconductor will begin a cash tender offer to acquire tradable shares of Fairchild’s common stock at US$20 per share to provide cash for each shareholder. After obtaining the approval of the relevant regulatory authorities, satisfying other customary closing conditions, and all the shares in the bid invitation are accepted for payment, both parties will make the final agreement effective as soon as possible. This acquisition will result in the transfer of all stocks not bidding in the bid price. The right to charge $20 per share in cash. The transaction has been unanimously approved by the ON Semiconductor and Fairchild Semiconductor Board of Directors and is expected to reach a final transaction by the end of the second quarter of 2016. The proposed transaction does not require the approval of ON Semiconductor shareholders.

Deutsche Bank is the chief financial advisor to ON Semiconductor, Morrison & Forester is the legal advisor to ON Semiconductor, and BofA Merrill Lynch is also the financial advisor to ON Semiconductor. . Both Deutsche Bank and Bank of America Merrill Lynch provided committed debt financing for the transaction. Goldman Sachs is Fairchild’s exclusive financial advisor, together with Wachtell, Lipton, and Rosen & Katz are also Fairchild’s legal advisors.