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STM: Joining The M&A Bandwagon?

27 October 2015 by lberuti

Technology has always been a fertile ground for M&A activity, but it was not until this year that chipmakers embraced dealmaking at a record pace. $76bln in mergers and acquisitions have been announced by makers of semiconductors since the beginning of the year, as people seem to think that they should either exit the sector or get much bigger. STM ( STMicorelectronics NV ) is no different from its competitors, and it has struggled to generate consistent profit amid waning personal-computer demand and competition from rivals such as Texas Instruments Inc, but also from Apple Inc or Samsung Electronics Co which increasingly build their own parts. On its side, Fairchild, one the oldest chipmakers in the US, was reported earlier this month to have hired Goldman Sachs to help it find a buyer, which sent its stock up more than 20% over the last couple of weeks. That could be no deterrent to STM which were rumoured today to mull a bid, but as Fairchild is now a $2bln company, investors sent STM’s 5 year risk premium 20bps wider at 105bps.