National Semiconductor is to buy fellow chipmaker Cyrix in a stock swap valued at about US$550 million.
The move will allow the merged company to develop system-on-a-chip technology for the rapidly growing entry level PC, Net-PC and information-appliance markets, company officials said.
"The mainframe was replaced by the mini computer, the mini was replaced from below and it is logical to assume that the PC will be displaced by high performance information appliances," said Jay Swent, acting CEO of Cyrix, in a teleconference. He added that Cyrix remains committed to the 686 processors.
"The unique combination of technologies resulting from the merger gives us all of the building blocks to provide complete system-on-a-chip solutions for sub-$500 PCs and a broad range of low-cost information appliances," said National CEO Brian Halla. "Cyrix's family of high-performance and high-integration x86 processors will enable National to drive dramatic market growth for products such as network PCs, hand-held PCs, net browsers and other information appliances that are becoming extremely affordable."
Under the terms of the agreement announced today, each share of Cyrix common stock will be exchanged for .825 of a share of National common stock. Based on the closing price of National's shares on July 25, the aggregate value of the transaction to Cyrix stockholders would be approximately $550 million.
Today's move, in combination with National's other recent company and technology acquisitions, transforms National into a provider of all types of silicon devices necessary to built PCs and information appliances, one industry watcher said.
"National until now was like the guy who supplies the hinges to Mercedes Benz," said Jim Turley, senior editor for Microprocessor Report. "If you open up a PC, the two or three expensive bits come from Intel, the memory comes from Japan and everything else comes from National Semiconductor. With Cyrix they have a soup-to-nuts solution."
In March, National acquired Mediamatics, a California-based company that supplies MPEG audio/video decoders to the personal computer market. National recorded a one-time charge for in-process and development of $62 million related to the transaction.
In July, National also bought certain assets of the PicoPower product group of Cirrus Logic for an undisclosed amount, posting a one-time charge to expense for in-process research and development of approximately $10 million.
Today's transaction is pending acceptance by Cyrix shareholders and regulatory approval.
Expected to be completed in November, the transaction is intended to be accounted for as a pooling of interests. National expects to recognise a one-time charge related to certain acquisition and related expenses in its November quarter, company officials said.
Cyrix, with headquarters in Richardson, Texas, can be reached on the World Wide Web at http://www.cyrix.com/. National Semiconductor, based in Santa Clara, California, can be reached on the World Wide Web at http://www.national.com/ .