ON Semiconductor has completed its previously announced $2.4 billion cash acquisition of Fairchild Semiconductor International.
"The acquisition of Fairchild is a transformative step in our quest to become the premier supplier of power management and analogue semiconductor solutions for a wide range of applications and end-markets," said Keith Jackson, president and CEO of ON Semiconductor.
He added: "Fairchild provides us a platform to aggressively expand our profitability in a highly fragmented industry. With the addition of Fairchild, our industry leading cost structure has further improved in a significant manner and we are now well positioned to generate substantial shareholder value as we integrate operations of the two companies."
The two companies have a limited portfolio of compound semiconductors. Fairchild offers a range of high voltage SiC Schottky diodes. ON Semiconductor sells some power GaN Cascode transistors made by Transphorm.
On September 16, 2016, ON Semiconductor received confirmation that clearance related to the completion of its proposed acquisition of Fairchild from the Ministry of Commerce in the People's Republic of China had been obtained and that ON Semiconductor was entitled to close the transactions under PRC law.
The acquisition is expected to be accretive on a GAAP EPS basis in the second half of 2017 and immediately accretive on a non-GAAP basis. ON Semiconductor expects to achieve annual cost savings run rate of $160 million by the end of 2017, $200 million by the end of 2018, and $225 million by the end of 2019. The cost savings targets are based on Fairchild's 2015 annual results.
ON Semiconductor has also announced a new organisational structure which will comprise three reporting units - Power Solutions Group, headed by Bill Hall, Analogue Solutions Group, headed by Bob Klosterboer, and Image Sensor Group, headed by Taner Ozcelik. The operations of System Solutions Group have been absorbed in the three reporting units.