NEW YORK -- National Semiconductor Corp. Monday said it has bought rival computer chip maker Fairchild Semiconductor from its parent, Schlumberger Ltd., for approximately $122 million in common stock and warrants.
The transaction does not include certain Fairchild facilities not now in use, and debt related to those sites, said Santa Clara, Calif.-based National Semiconductor.
The sale ended weeks of speculation over the fate of Fairchild, an ailing Silicon Valley company whose parent, Paris-based Schlumberger, had been looking for a buyer since its attempt to sell Fairchild to Fujitsu Ltd. of Japan was scuttled by industry and government opposition in March.
One analyst said Fairchild had been sold at a 'bargain-basement' price and speculated National may have refused to buy under-used Fairchild chipmaking facilities in Japan and in West Germany.
'The thing that surprised me ... was the price,' said Gene Norrett, an industry analyst with the market research firm of Dataquest Inc., in San Jose, Calif. 'The price is a bargain-basement price.'
Nevertheless, National Semiconductor apparently beat out a competing bid from Fairchild's management, led by company President Donald W. Brooks and reportedly financed by Citicorp of New York.
The acquisition is expected to create a $1.5 billion-a-year company that will be one of the largest makers of logic chips, which act as the brains of computers.
National Semiconductor President Charles Sporck, a former Fairchild executive, said the merger would make National 'America's best technologically balanced semiconductor supplier.'
He also said the union of the two companies would be good for the U.S. computer industry, which has seen few friendly mergers in its generation-long history.
'We believe this acquisition provides complementary strengths - broadening our product offerings, customer base and technology -- and further enhances our competitive position,' Sporck said.
'This consolidation will strengthen the American semiconductor industry, as well as National's competitive position in the worldwide marketplace,' Sporck added.
National Semiconductor's stock was up 37 cents to $15.25 a share and Schlumberger, trading ex-dividend, gained $1 to $37.25 in late afternoon trading on the New York Stock Exchange.
Fairchild has 9,000 employees at chip making facilities in Maine, Washington state and California, in addition to sales offices in Asia and Europe.
Norrett of Dataquest said he expects between 15 percent and 20 percent of Fairchild's employees will have to be laid off as the companies merge operations.
Analysts in recent weeks have criticized a union of National and Fairchild, saying there would be significant areas of overlap because both companies produce logic chips, some of which compete.
But Sporck noted Fairchild's strength in designing semiconductors for use in mainframe computers and computer peripherals such as printers, which target the burgeoning market for computerized data processing systems.
He also cited Fairchild's design of special military-application computer chips, which are expected to 'round out' National's own offerings.
Sporck said National's 'first priority will be to ensure continued service and support to both Fairchild and National customers worldwide.'
