Why Silicon Labs Stock Glows Green Today

Silicon Labs (NASDAQ: SLAB) banal skyrocketed 48% done 11:25 a.m. ET Wednesday aft announcing its Q4 results -- and much importantly, also announcing Texas Instruments (NASDAQ: TXN) volition bargain it.

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Silicon Labs bushed net successful its Q4 report. Analysts expected the semiconductor banal to gain $0.55 per stock connected income of $207.6 million. Silicon Labs bushed connected some apical and bottommost lines, reporting $0.56 per stock (adjusted) connected $208 cardinal successful sales.

Of course, the "earnings beat" pales successful value to the day's bigger news. To "create a planetary person successful embedded wireless connectivity solutions," Texas Instruments volition get and bring Silicon Labs in-house.

Paying $231 per stock cash, Texas Instruments proposes to get Silicon Labs for $7.6 billion. (Minus Silicon Labs' nett currency position, the endeavor worth is "approximately $7.5 billion.)

In exchange, Texas Instruments volition get a subsidiary that's grown revenues 15% annually for much than a decade, that took successful $785 cardinal successful income past year, that mislaid $65 cardinal -- but generated astir $66 cardinal successful affirmative escaped currency flow.

Silicon Labs banal ran up connected the quality today, but astatine $203 and change, inactive has different 14% to spell earlier it reaches the terms Texas Instruments wants to wage for it.

TI says it hopes to adjacent this transaction successful the archetypal fractional of 2027 -- truthful investors who bargain and clasp Silicon Labs banal mightiness perchance request to hold much than a twelvemonth to currency in. For a 14% instrumentality that mightiness beryllium worthy it, but with Silicon Labs banal present valued astatine much than 100 times escaped currency flow, and closing nary definite thing, determination is hazard involved.

Caveat investor.

Before you bargain banal successful Silicon Laboratories, see this:

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