Total purchase consideration at closing will be approximately $US575 million, payable as a combination of cash and long-term note to TDK. In addition, the agreement includes potential contingent payments of up to $US50 million based on future performance of the business. The cash portion of the purchase price will be financed on an interim basis using short term financing in addition to existing cash on hand. TI is considering various alternatives for permanent financing. TDK and TI expect to close within the next two months, following appropriate regulatory approvals. SSi's Communications Products Division, which employs about 90 people, and TDK Systems Division (TSD) are not part of the transaction.
"This acquisition combines TI's digital signal processing solutions leadership, manufacturing capacity and process technology with SSi's analog/mixed signal expertise," said Tom Engibous, TI executive vice president and semiconductor group president. "It specifically meets the needs of the mass-storage industry which requires high-volume, semiconductor technology partners to provide greater levels of density, integration and performance, ultimately resulting in more cost-effective solutions. It helps our customers meet their time to volume requirements with superior products."
SSi Executive Vice President and Chief Operating Officer Rick Goerner added: "Today's announcement is good news for our customers as we will now have access to TI's high volume, global manufacturing network and advanced process technologies. We're also pleased that TI will retain SSi's innovative culture, which has created an impressive array of products for the hard-disk drive and removable storage markets."
Upon the closing, SSi will become a wholly-owned subsidiary of TI. Mr. Goerner will become president of the subsidiary, reporting to Delbert A. Whitaker, TI Semiconductor Group senior vice president and worldwide manager of its mixed-signal and logic business.
SSi employs about 2000 people worldwide, with company headquarters in Tustin, California, and primary operations located in Santa Cruz, California, including a six-inch, submicron wafer fabrication facility. The company's assembly and test facility is located in Singapore with research and design sites in California, Colorado, Singapore and Tokyo. Silicon Systems was acquired by TDK in 1989.
Texas Instruments Semiconductor Group employs more than 31,000 people, with sales or manufacturing locations in more than 30 countries worldwide.
In the fast-growing removable storage market, the acquisition will enhance SSi's and TI's combined presence in Japan and strengthen its position for next-generation mass-storage products. Removable storage is defined as products with storage media that can be removed from the equipment which reads/(writes) data from/(to) the media itself. Examples include CD-ROMs, magneto-optical drives (MOD), and digital video disks (DVD). In 1995, an estimated 42 million CD-ROM units were shipped, with 90 million units expected to be sold in 2000. The MOD and DVD markets are just beginning to emerge.
There are many similarities in the products needed for HDD and removable storage, particularly read/write pre-amplifiers, read channels, servo-motor drivers, and interface controllers. The acquisition will provide complementary design and system expertise, and build on a strong initial position in MOD and DVD. SSi and TI Japan also have well established relationships with the manufacturers in the optical removable storage industry which is concentrated in Japan.
TDK Corporation is a leading global manufacturer of electronic materials and components, as well as recording media. The company's technological skills have resulted in a broad lineup of products that are core ingredients in such high-potential markets as computers, telecommunications, home entertainment and many others. International presence is a key strength: much of TDK's production takes place outside of Japan, and overseas markets now account for more than half of total sales."
Silicon Systems specializes in the design and manufacture of application-specific, mixed-signal ICs used in storage and communications products. The company designs, manufactures, and ships in volume ICs for every function in drive electronics.
An industry pioneer and the world leader in digital signal processing solutions for more than 13 years, Texas Instruments Semiconductor Group provides innovative solutions to more than 20,000 customers worldwide in the computer, communications, consumer, automotive, military and industrial markets. TI offers a unique breadth of digital and mixed-signal products and technologies, hardware and software development tools, design information services and global support.
Texas Instruments Incorporated, headquartered in Dallas, Texas, is a high technology company with sales or manufacturing operations in more than 30 countries worldwide. TI products and services include semiconductors; defense electronics systems; software productivity tools; printers, notebook computers and consumer electronics products; electrical controls; and metallurgical materials.
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