Texas Instruments to buy Unitrode

Texas Instruments (NYSE: TXN) said Monday it plans to buy Unitrode Corporation (NYSE: UTR), a designer and supplier of components for analog semiconductors in a deal valued around $1.2 billion.

Shares of Texas Instruments were down 2 7/8 to 136 1/8. Unitrode shares jumped 8 7/16 to 35 3/16.

The stock-for-stock merger transaction calls for Texas Instruments to issue about 8.9 million shares, which, based on TI's closing stock price of $38.60 on Friday, would be worth about $1.2 billion.

Unitrode's primary products control power supply control, interface, and battery management, technologies critical for portable devices. The power management segment was $2.2 billion in 1998 and is expected to reach $4.1 billion by 2002, according to Dataquest.

TI plans to target the mass market by increasing its analog business and the battery management segment, which cellular phones and notebook computers depend on, said Del Whitaker, TI senior vice president and manager of Worldwide Analog and Logic Products. The market for battery management is expected to grow 32 percent per year, as digital cameras and Internet audio players also require the technology, according to market analyst Venture Development Corporation.

Unitrode will continue to operate from headquarters in Merrimack, NH as a subsidiary of TI. Boards of directors of both companies have approved the acquisition, and pending approval by Unitrode stockholders, the deal will be completed in the second half of the year.

Texas Instruments recently reported strong second quarter results, and an upbeatforecast for its semiconductor business.