Semtech Corp (SMTC) & Intersil (ISIL) May Be Takeover Targets Following Infineon’s IRF Deal

Shares of Semtech Corporation (SMTC), Intersil (ISIL), Fairchild Semiconductor Int’l Inc. (FCS) and ON Semiconductor Corp. (ONNN) rallied yesterday following Infineon (OTC: IFNNY)’s $3 billion acquisition, its biggest-ever, of California-based International Rectifier Corporation (IRF).

According to Bloomberg, shares of Semtech, Intersil, Fairchild and ON Semiconductor Corp. rallied yesterday amid speculation they could be Infineon’s next targets after the German chipmaker announced IRF’s acquisition for an above-average premium of 56 percent. Should those companies, which based on their current average price-per-share have a combined value of about $9 billion, fetch the same premium in a takeover as that of IRF’s, it would create a combined $5 billion in shareholder value. Bloomberg notes however, that there’s no guarantee any will get bids.

“These companies haven’t been able to organically grow to a substantial market share, so the secondary way you can grow share is by M&A,” Anand Srinivasan, a New York-based analyst for Bloomberg Intelligence, said to the publication in a phone interview. “We’ve been starting to see that over the last few quarters in this space.”

Price action: In early trading, SMTC rose 2.58% to $24.62. Shares of Intersil, Fairchild and ON Semiconductor Corp. closed at $13.93, $16.74, and $9.20, respectively, on Wednesday.

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