ON Semiconductor moves to acquire Fairchild for US $2.4 billion. (ON Semiconductor/LEDinside)

Key Transaction Highlights:

• Creates a leader in the power semiconductor market with a broad and deep product portfolio

• Highly complementary product lines offering the full spectrum of high, medium and low voltage products

• Strengthens presence in key strategic areas – industrial, automotive and smartphone end markets

• Immediately accretive to non-GAAP earnings per share and free cash flow

• Expect significant accretion to non-GAAP EPS within a few quarters post close

• Clear line of sight to $150 million in annual cost savings within 18 months of the transaction close

“As part of ON Semiconductor, Fairchild will continue to pioneer technology and design innovation in efficient energy consumption to help our customers achieve success and drive value for our partners and employees around the world,” stated Mark Thompson, chairman and chief executive officer of Fairchild. “We look forward to working closely with the ON Semiconductor team to ensure a smooth transition.”

Following consummation, the transaction is expected to be immediately accretive to ON Semiconductor’s non-GAAP earnings per share and free cash flow, excluding any non-recurring acquisition related charges, the fair value step-up inventory amortization, and amortization of acquired intangibles. ON Semiconductor anticipates achieving annual cost savings of $150 million within 18 months after closing the transaction.

The transaction is not subject to a financing condition. ON Semiconductor intends to fund the transaction with cash from the combined companies balance sheet and $2.4 billion of new debt. The debt financing commitment also includes provisions for a $300 million revolving credit facility which will be undrawn at close. ON Semiconductor remains committed to its share repurchase program, and the agreed upon financing provides flexibility to continue share repurchases going forward.

Tender Offer and Closing

Under the terms of the definitive agreement, ON Semiconductor will commence a cash tender offer to acquire Fairchild’s outstanding shares of common stock for $20.00 per share, net to each holder in cash. Following receipt of required regulatory approvals and the satisfaction of other customary closing conditions, and after such time as all shares tendered in the tender offer are accepted for payment, the definitive agreement provides for the parties to effect, as promptly as practicable, a merger which would result in all shares not tendered in the tender offer being converted into the right to receive $20.00 per share in cash. The transaction has been unanimously approved by ON Semiconductor’s and Fairchild’s boards of directors and is expected to close late in the second quarter of 2016. No approval of the stockholders of ON Semiconductor is required in connection with the proposed transaction.

Deutsche Bank is acting as the lead financial advisor to ON Semiconductor, and Morrison & Foerster served as legal advisor to ON Semiconductor. BofA Merrill Lynch is also acting as a financial advisor to ON Semiconductor. Deutsche Bank and BofA Merrill Lynch are providing committed debt financing for the transaction. Goldman Sachs acted as exclusive financial advisor to Fairchild, along with Wachtell, Lipton, Rosen & Katz, who served as legal advisor.