Nomura Securities Maintains a 'Reduce' on Texas Instruments (TXN); Merger Impacts MXIM & LLTC

Nomura Securities maintains a 'Reduce' on Texas Instruments (NYSE: TXN).

Nomura analyst, Romit Shah, says, "TI announced plans to acquire National Semi (NYSE: NSM) for $6.5bn in an all cash deal, a premium of 78% to the closing price. With the deal only modestly accretive, 7% or $0.20 accretive to our 2012E EPS of $2.70, we think investors must believe that TXN + NSM is worth a higher multiple than TI alone. We argue that TI does not deserve a better multiple based on the following: 1) semi acquisitions of greater than $500mn have a terrible track record of generating shareholder value; 2) NSM has been a perennial share loser over the last five years; 3) cost synergies are immaterial ($100mn). TI’s market share would increase from 14% to 18% for total analog. Based on product overlap, we believe Maxim (Nasdaq: MXIM) and Linear (Nasdaq: LLTC) should see the most impact from the merger while Analog Devices (NYSE: ADI) will be least impacted."

For more ratings news on Texas Instruments click here and for the rating history of Texas Instruments click here.

Shares of Texas Instruments closed at $34.11 yesterday.

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