Fairchild Semiconductor, a global supplier of power semiconductors, announced that it expects to launch a tender offer to acquire 100 percent of the outstanding shares of Taipei-based System General Corp. (6280.TW) for NTD 93 per share in cash through a wholly owned Fairchild subsidiary.

"We are excited to announce this deal with System General—a leading supplier of analog power management semiconductors for AC/DC offline power conversion in computers, LCD monitors, printers, chargers and consumer products,” said Mark Thompson, Fairchild’s president and CEO. "We believe System General has one of the top Asia-based power analog management teams and their growing portfolio of pulse width modulated (PWM) controllers, desktop PC power supply supervisor and combo ICs, and power factor correction (PFC) controllers, coupled with their customer relationships and strong local field applications support, has made them a significant competitor in the Taiwan and China AC/DC power conversion market. When combined with Fairchild’s global infrastructure, process and package capabilities, worldwide customer access and manufacturing scale, we will possess a leading position in the AC/DC offline power conversion market with the opportunity to accelerate our growth and margin improvement.”

System General’s net revenue through the first 11 months of 2006 was NTD 1,138 million, or approximately US $35 M. In the proposed transaction, approximately 250 System General employees will join Fairchild, including the current management team. System General will continue normal operations under its name after the closing of the tender offer and prior to the share swap described below and will operate as an independent business within Fairchild during that time. After the completion of the transaction, System General will be a wholly owned Fairchild subsidiary, and Fairchild and System General’s management will work together to combine the power conversion businesses of each company and form a single business unit targeting worldwide AC/DC offline power conversion applications. Fairchild expects the acquisition to be neutral to Fairchild’s earnings per share in 2007 and to be accretive to earnings per share in 2008 and beyond.

“Acquiring System General is a natural extension of Fairchild’s business strategy to invest aggressively to expand our sales and margins by pursuing fast-growing power analog markets,” said Thompson. “Over two thirds of the worldwide power management IC market is in Asia, with six of the top 10 worldwide power supply OEMs located in Taiwan. The AC/DC offline power conversion market, which consists of isolated PWM controllers, PFC controllers and AC/DC offline regulators measured over $1.5 B in 2005, and this combination of Fairchild and System General places us as a leader in this fast growing segment. The combination is especially synergistic—System General is strong in PWM controllers in Taiwan and China, while Fairchild is a leading provider of AC/DC offline regulators with strong sales in Korea and China. System General’s management has a proven track record of servicing key OEMs in Taiwan and China, with an experienced, technical field sales force and industry leading innovative products. Fairchild expects to continue building upon the R&D design center System General has created in Taiwan to strengthen System General’s technical and innovation capabilities. We expect the acquisition of System General to further accelerate the growth of Fairchild’s overall AC/DC power conversion business, and we expect the margin profile of this business to continue to expand over time.”