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Intersil’s 2002 Elantec Deal: What the $1.4 Billion Figure Meant

Intersil’s 2002 Elantec acquisition carried an implied value of about $1.4 billion at announcement—not $1.4 billion in cash. Here are the terms, timeline and stated rationale.
From TheFinanceBase Team2 min to read
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Intersil’s March 2002 agreement to acquire Elantec was valued at approximately $1.4 billion based on Intersil’s share price at the time of the announcement. Elantec shareholders were offered a mix of Intersil stock and cash—not $1.4 billion in cash. The merger closed on May 14, 2002.

How much did Intersil pay for Elantec?

The companies announced the agreement on March 10, 2002. For each outstanding Elantec common share, shareholders were to receive 1.24 shares of Intersil Class A common stock plus $8 in cash, without interest. The announcement valued the transaction at about $1.4 billion in equity, using Intersil’s March 8 closing share price of $36.65. It also described the offer as a 15% premium to the 30-day average exchange ratio. The joint announcement filed with the SEC provides the offer terms and valuation basis.

That headline value was an estimate tied to Intersil’s stock price on a specific date. It was not the amount of cash paid, nor a fixed cash purchase price: most of the per-share consideration was Intersil stock, whose market value could change.

When was the acquisition completed?

The March 10 announcement marked the agreement, not the completion of the merger. The transaction was subject to shareholder votes and other conditions, including antitrust approvals, described in the SEC-filed proxy materials. Intersil later reported that it acquired all of Elantec’s outstanding common stock on May 14, 2002, after shareholder approvals, and accounted for the acquisition using the purchase method. Intersil’s 2004 Form 10-K, filed in 2005, records the closing date and accounting treatment.

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March 8, 2002 Intersil’s $36.65 closing share price was used to calculate the announced implied equity value.
March 10, 2002 Intersil and Elantec announced the definitive merger agreement and stock-and-cash terms.
May 14, 2002 The acquisition closed after shareholder approvals.
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Why did Intersil want Elantec?

Intersil and Elantec presented the deal as a way to broaden Intersil’s analog semiconductor business. The announcement said Elantec brought high-performance analog integrated circuits used in optical storage—including CD read/write and DVD recordable applications—and flat-panel displays. Intersil said those products complemented its wireless and analog portfolio, that the companies shared significant customer overlap, and that the combination would expand its presence in additional analog markets while strengthening wireless networking.

The companies’ SEC-filed announcement called the firms leaders in fast-growing semiconductor markets; that was their promotional characterization of the deal, not an independent finding about its eventual results. The proxy materials similarly described the combination as supporting Intersil’s strategy in high-margin, high-performance analog and wireless markets. Those statements explain the rationale offered to shareholders; they do not by themselves establish that the acquisition later produced particular synergies or financial gains.

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What the $1.4 billion figure does—and does not—tell you

  • It is an announcement-date implied equity valuation. The calculation used Intersil’s March 8, 2002 closing price, not a price that remains applicable today.
  • It is not the cash portion alone. The announced consideration combined 1.24 Intersil shares with $8 cash for each Elantec share.
  • It is distinct from the closing date. The agreement was announced in March; the acquisition was completed in May 2002.
  • It does not prove later performance. The cited company materials explain why the boards supported the transaction, but do not establish realized synergies or business outcomes.

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