Boston, MA 04/10/2014 (wallstreetpr) – ON Semiconductor Corp (NASDAQ:ONNN) is a provider of energy efficient electronic components. The company designs, manufactures and markets its products to automotive, computing and telecoms customers.
With the competition in the semiconductor market turning red-hot, the company is currently looking for avenues to keep its business growing. Therefore, acquisitions are part of its game plan. The company recently announced it will acquire Truessense Imaging and incorporate the business into its Application Products segment. The acquisition deal of $92 million will be paid in cash. ON Semiconductor Corp (NASDAQ:ONNN) is expected to raise the acquisition amount from its own balance sheet.
Truesense provides image sensor solutions used in traffic monitoring, scientific imaging, surveillance, machine vision and photography. The sensor devices have a wide range of industrial application. The demand for imaging solutions is expected to increase across the world as dealing with traffic and security issues become more complex.
Benefits of the deal
First and foremost, ONNN will finance the deal from its own cash, which means that the company will suffer no debt following the transaction. Moreover, it also relieves investors of concerns about share dilution to finance the acquisition.
The acquisition of Truesense is expected to immediately improve earnings and margins. ON Semiconductor Corp (NASDAQ:ONNN) will be able to expand its imaging technology portfolio and immediately gain new customers numbering about 200. Moreover, the acquisition will bring ONNN into the heart of imaging technology experience of about four decades.
Boards of directors of the two companies have already approved the deal that is expected to close as soon as regulators give their consent.
Financial performance
According to sources with direct knowledge of the deal, Truesense generated revenue of about $79 million in 2013. The image sensor company enjoys operating margin of 23 percent.
ON Semiconductor Corp (NASDAQ:ONNN) earned 17 cents per share in fiscal 2013 fourth quarter, the latest reporting to-date. The earnings beat Wall Street estimation of 14 cents per share. Revenue came in at $718 million, compared with $691 million expected by Wall Street.
