Texas Instruments Inc. on Monday said it would sell its sensor and control business to private equity firm Bain Capital for $3 billion in cash as part of a move to focus on chips for mobile phones and other consumer electronics.
The company says the deal allows it to shed a business that has little bearing on its current objectives. The move also highlights a growing trend of private-equity firms seeking deals in the technology sector, an area they historically have avoided.
The Attleboro, Mass.-based division produces switches and sensors for vehicle transmissions and thermostats as well as aircraft circuit breakers, air conditioning products and other items. It reported revenue of more than $1 billion in 2004.
"I think it's generally a positive transaction," said Cody Acree, an analyst with Stifel Nicolaus. "It's just a continued refocus of the firm."
Sensors and controls form a stable business that can protect the company during a technology sector downturn, but Acree said "investors are paying for growth."
Thomas Wroe Jr., president of the sensor and control unit, will continue to lead its 5,400 employees, Texas Instruments said. The current management team also will remain with the unit, the company said.
The unit accounted for about 8%, of the company's 2005 revenue, said Ron Slaymaker, Texas Instruments' vice president and manager of investor relations.
The sale will allow Texas Instruments to focus on its semiconductor business, including analog and digital signal processing chips, Chief Financial Officer Kevin March said.
The company said it expected the sale to be completed in the first half of 2006. The Texas Instruments board of directors has approved the sale, though completion is contingent on regulatory approval, the company said.
Shares of Texas Instruments fell 27 cents to $34.18.