Texas Instruments today signed an agreement to purchase fellow chipmaker National Semiconductor for $6.5 billion or about $25 per share, a hefty premium over National's closing price today of $14.07. The all-cash transaction has already been approved by both company boards but remains subject to approval by National's shareholders as well as U.S. and international regulators.

"This acquisition is about strength and growth," said TI CEO Rich Templeton. "National has an excellent development team, and its products combined with our own can offer customers an analog portfolio of unmatched depth and breadth." Templeton said that the combined sales team will be 10 times larger than National's is today and its portfolio will be exposed to more customers.

"Our two companies complement each other very well," said Don Macleod, National's CEO. TI offers some 30,000 analog products and "extensive customer reach," while National touts 12,000 analog products with customers in the industrial power market.

Company officials claim there is little overlap on the product offerings of the two companies even though they are often seen as direct competitors. Upon merging, National will become a part of TI's analog segment, which will represent almost 50% of the company's revenue.

According to iSuppli, the combined TI-National Semiconductor would push the company to the third position among chip makers, with revenues of approximately $14.5 billion.