Texas Instruments (TXN) is writing a big check to expand its wireless game. The chip giant announced Wednesday it will acquire Silicon Laboratories Inc. (SLAB) for $7.5 billion in cash, adding a massive portfolio of wireless connectivity products to its already substantial semiconductor empire.

The Deal Structure

Silicon Labs shareholders will receive $231 in cash for each share they hold when the deal closes. That represents a hefty premium that sent Silicon Labs shares soaring nearly 50% in premarket trading to $204.00, while Texas Instruments shares dropped 3.83% to $216.58.

Texas Instruments plans to fund the acquisition through a combination of cash on hand and debt financing, with no financing contingency attached. The company had $3.2 billion in cash and cash equivalents as of December 31, so it's tapping the debt markets to get this done.

The transaction is expected to close in the first half of 2027, assuming regulators sign off and standard closing conditions are met.

What Texas Instruments Is Getting

This acquisition brings roughly 1,200 products supporting multiple wireless standards and protocols into the Texas Instruments fold. That's not a small addition to anyone's product catalog.

"Silicon Labs' leading embedded wireless connectivity portfolio enhances our technology and IP, enabling greater scale and allowing us to better serve our customers. Texas Instruments' industry-leading and internally owned technology and manufacturing is optimized for Silicon Labs' portfolio, and will provide customers dependable supply worldwide," said Haviv Ilan, chairman, president, and chief executive officer of Texas Instruments.

The combination merges Silicon Labs' mixed-signal capabilities with Texas Instruments' analog and embedded processing portfolio, along with its proprietary manufacturing infrastructure. The idea is that putting these pieces together creates something bigger than the sum of its parts, offering customers more innovation and broader market access.

The Financial Upside

Texas Instruments expects the deal to be accretive to earnings per share in the first full year after closing, excluding transaction-related costs. More impressively, the company projects approximately $450 million in annual manufacturing and operational synergies within three years of closing the deal.

That's a meaningful number, suggesting Texas Instruments sees real opportunities to streamline operations and cut costs by bringing Silicon Labs' products into its own manufacturing ecosystem.

Silicon Labs' Final Report

In a separate announcement Wednesday, Silicon Labs reported fourth quarter adjusted earnings per share of 56 cents, beating the consensus estimate of 55 cents. Sales came in at $208.2 million, edging past the street view of $207.6 million.

Not a bad final earnings report as an independent company.