Skip to main content

Market Overview

Fairchild Semiconductor May See M&A Bidding War, Credit Suisse Says

Share:
  • Shares of Fairchild Semiconductor Intl Inc (NASDAQ: FCS) have appreciated 36.91 percent over the past three months, from a low of $12.66 on August 25.
  • John W. Pitzer of Credit Suisse has upgraded the rating on the company from Underperform to Neutral, while raising the price target from $16 to $20.
  • ON Semiconductor Corp (NASDAQ: ON) announced on November 18 that it intended to acquire Fairchild Semiconductor through an all cash deal at $20 per share.

Analyst John Pitzer mentioned that the offer represented a 12 percent premium on Fairchild Semiconductor’s closing price on November 17 and a 30 percent premium to the 30-day moving average.

Pitzer elaborated that the deal “(1) will be financed with cash on hand from the combined enterprise and $2.4bn in new debt and (2) is expected to close in C2Q16.”

The deal is expected to be immediately accretive to ON Semiconductor’s non-GAAP EPS and free cash flow. In addition, ON Semiconductor expects synergies at an annual run rate of $150 million, 18 months from the closing of the acquisition.

According to the Credit Suisse report, “”From a strategic perspective, the combined entity becomes a leader in power management and the 10th largest non-memory Semi company worldwide with annual Rev of ~$4.9bn.”

The combined entity will offer the entire range of voltage products. However, Pitzer emphasized that the deal was defensive in nature, while also being a departure from “ON's previous focus on cash returns and tuck-in acquisitions – though it believes the acquisition will strengthen cash flow in the longterm.”

"While customer profiles are similar for the two companies, product portfolios are complementary, offering opportunities for potential Rev synergies – ON noted that both companies have complementary product portfolios and serve similar end-markets, customers, and geographies,” the report added.

Latest Ratings for FCS

DateFirmActionFromTo
Mar 2016JP MorganAssumesNeutral
Jan 2016Credit SuisseMaintainsNeutral
Nov 2015SusquehannaDowngradesPositiveNeutral

View More Analyst Ratings for FCS
View the Latest Analyst Ratings

 

Related Articles (FCS + ON)

View Comments and Join the Discussion!

Posted-In: Credit Suisse John W. PitzerAnalyst Color Long Ideas Upgrades Price Target Analyst Ratings Trading Ideas

Latest Ratings

StockFirmActionPT
GOOGLMizuhoMaintains2,600.0
VZIOWells FargoInitiates Coverage On31.0
TWTROppenheimerMaintains85.0
SBUXOppenheimerMaintains135.0
OMWells FargoInitiates Coverage On63.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
SPAC
Everything you need to know about the latest SPAC news.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com