Fairchild Semiconductor (FCS) Receives Unsolicited Bid

Shares of the Fairchild Semiconductor International Inc. (FCS) were trading up +1.61 or +8.24 percent to $21.14 per share in Tuesday’s pretrial after the company announced early this morning it had received an unsolicited bid from an unnamed suitor. Fairchild Semiconductor stock closed at $19.53, up +0.04 or +0.21 percent in Monday’s regular trading session.

San Jose, California based Fairchild Semiconductor International Inc. was founded in 1957 as a unit of Fairchild Camera and Instrument.
The company subsequently became a pioneer in the manufacture of integrated circuits and transistors. Fairchild currently produces integrated circuits, field effect transistors, motor controllers and signal processors and is divided into several segments: Mobile, Computing, Consumer and Communication, Power Conversion, Industrial and Automotive, and Standard Discrete and Standard Linear. Fairchild operates facilities in California, Maine, Utah and Pennsylvania in the United States, as well as locations in India, South Korea, Singapore, the Philippines and China among others.

Early this morning, Fairchild Semiconductor announced it had acknowledged receipt of an unsolicited proposal for the acquisition of all of its outstanding shares of common stock for $21.70 per share in cash. The announcement omitted the name of the potential buyer and was limited to saying that its board of directors would carefully review the bid with its financial advisors and legal counsel.

Fairchild also said that it had filed an amended Schedule 14D-9 form with the Securities and Exchange Commission and that Goldman Sachs (GS) & Co. was acting as its financial advisor and Wachtell, Lipton, Rosen & Katz were serving as the company’s legal council on the matter.

The unsolicited bid follows a previous bid for Fairchild made on November 18th by a subsidiary of ON Semiconductor Corp. (ON). ON Semi bid $20 per share or $2.4 billion in cash for the company. The move to acquire Fairchild by ON Semiconductor was likely to thwart other competitors from buying Fairchild.

A possible candidate for the unsolicited bid could be China’s state backed Tsinghua Unigroup Ltd. whose goal is to be the world’s third largest chipmaker. Tsinghua has already spent over $9.4 billion over the last two years and bought a stake in Western Digital Corp. (WDC), a U.S. data storage company. Tsinghua plans to invest another $47 billion over the next five years.

The semiconductor industry is changing rapidly as it consolidates and combines with other sectors. Two examples include the Intel (INTC) deal with Altera Corp. (ALTR) which increases Intel’s presence in the data center business. Another example is Avago (AVGO) targeting Broadcom Corp. (BRCM) to expand into wireless chip production.

Fairchild Semiconductor stock is reacting favorably to the news, trading to within $0.50 of the unsolicited bid in this morning’s premarket, while ON Semiconductor stock is off almost three percent. Fairchild’s board said it was still recommending the ON bid to shareholders while it reviews the current offer by the unnamed buyer.

Other News About FCS

Brokerages Set Fairchild Semiconductor Intl Inc (NYSE:FCS) PT at $17.78

Twelve analysts priced the stock, with one “sell”, ten “hold” and one “buy” recommendation.

Fairchild Receives Two ‘The Best Quality Partner' Awards From Huawei

Fairchild was the only participant among 300 that received two awards.

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Published on Dec 8, 2015
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2016. Content published with author's permission.

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