Troubled chip pioneer Zilog Inc is being acquired by a private investment partnership, Texas Pacific Group, for $25 per share, valuing the Campbell, California semiconductor manufacturer at $527m. This is the Texan’s third technology investment, having acquired both AT&T Paradyne Corp and Globespan Technologies Inc from Lucent Technologies last year. Texas Pacific is an investment group run by former advisors of the Texas billionaire Robert Bass. Following the merger, TPG will own over 90% of Zilog’s common voting stock: the current owners can elect either to receive $25 in cash or retain the share – except that no more than 400,000 shares of Zilog stock can be retained by current shareholders. Warburg, Pincus Capital Company LP is Zilog’s largest shareholder and has elected to retain 400,000 shares and vote in favor of the merger. If other shareholders want to retain stock, the 400,000 shares will be prorated amongst all shareholders electing to retain. In total, TPG will own 93.3% of Zilog and Zilog won’t have publicly listed shares following the merger. The board has unanimously approved the merger and expects to complete in the fourth quarter. Zilog’s second quarter results, announced simultaneously with the merger, saw a $4.7m profit on sales of $71.3m, down by 16.6% and 62% respectively on the same period last year. The company said industry conditions were difficult, but TPG partner David Stanton indicated that Zilog would continue as an active player in the microporcoessor market. Zilog… is well positioned to capitalize on the very attractive growing markets in which it participates…We are committed to supporting Zilog as it invests in R&D, manufacturing and marketing of its product line.