Intersil Agrees to Acquire Techwell for $370 Million (Update2)

Intersil Corp., a maker of semiconductors used in flat screens and cars, agreed to buy Techwell Inc. for about $370 million. The reason for this purchase is so that Intersil can expand its lineup of video chips. According to a statement released today, they agreed to pay $18.50 a share in cash for Techwell, which is 49% higher than its closing price. The reason why Intersil wanted and was interested in Techwell is because of their purpose in the IT world. They develop chips that handle video in recorders, auto dashboards, rearview mirrors, and rear-seat LCD screens. Since Intersil makes semiconductors used in flat screen monitors and cars, they need all of the chips they can get and since Techwell produces and makes these chips, it seems like a clear decision to buy the company and use it to their advantage. Techwell’s board unanimously approved the terms of the offer and is fully agreeing to sell their shares over to Intersil. Morgan Stanley is advising Intersil on the deal and has offered Intersil $390 million needed for the acquisition. Intersil expects the deal to close during the second quarter.

I believe that Intersil Corp. is very wise about buying Techwell because it will benefit their company tremendously. Their profits and revenue will increase because of the amount of chips they are about to receive from Techwell. Once these chips are in possession of Intersil, they can begin to produce more semiconductors for flat screens and cars. Thus, the company’s assets will increase immensely. By expanding the company’s lineup of video chips, Intersil will have a lot more options to develop different kinds and types of semiconductors. For example, they can invest in new ideas by bettering and developing better video technology in cars and flat screens. This possible new development might help their company increase the amount of revenue and services they receive. Perhaps, one day all cars in the United States will consider it a necessity to have some sort of video technology in each and every car.

Another smart decision made by Intersil is they definitely have increased their status as a manufacturer of technology chips. Now, companies will be turning to Intersil since they have a surplus amount of chips by buying Techwell. These companies will look to them as being the primary “care givers” to produce flat screens and videos in cars, such as GPSs and DVD players. It is also a good strategy by Techwell because they are benefitting another company, which will do its best to produce more technology by using the chips from their company. This is also a beneficial way to keep technology going forward and onward. Even though Techwell is being bought out and might be ceasing to exist, at least they can have the satisfaction of benefitting and helping another company. I think it is a wonderful idea when companies take interest and buy other companies for the best interest of furthering their mission, which is to provide better technology.

http://www.businessweek.com/news/2010-03-22/intersil-agrees-to-acquire-techwell-for-370-million-update2-.html