Two major semiconductor manufacturers are set to become one -- as Texas Instruments announced it has bought National Semiconductor for a cool $6.5 billion, or $25 per share.

The deal had a remarkable affect on National Semiconductor's stock, likely because TI bought it at an 80 percent premium, a lot for a company many analysts said was underperforming.

In after hours trading, National Semiconductor's stock rose an astounding 72.35 percent, or $10.18 per share, to $24.25. Texas Instruments' stock was basically unaffected, only dropping 1.50 percent to $33.60 per share.  

TI's chairman, president and chief executive officer, Rich Templeton said the deal was all about growing the product portfolio. Additionally, Don Macleod, National's chief executive officer, said the deal made sense because the two companies are complimentary. Instead of operating separately, the two companies will officially become one. However, National will retain its headquarters in Santa Clara, Calif.  

National has an excellent development team, and its products combined with our own can offer customers an analog portfolio of unmatched depth and breadth. In recent years, National's management team has done an outstanding job of improving margins and streamlining expenses, which upon close will increase TI's profitability and earnings per share, excluding transaction costs, Templeton said.

The combined sales team alone will be ten times larger than the current one on National, Templeton said. Furthermore, combined, the two companies offer 42,000 analog products. TI, which is responsible for 30,000 of those analog products, has the only 300-millimeter analog factory in the world. Recently, TI's have had some trouble from the earthquakes in Japan, with several production facilities operating with reduced power.

According to TI, National's analog segment, and sales of analog semiconductors will represent almost 50 percent of TI's revenue. National stockholders will receive $25 in cash for each share of National common stock they hold at the time of the deal's closing.

TI, the market leader in semiductors, had revenue of six billion in 2010 and 14 percent of the market. National had $1.6 billion revenue and three percent of the market.

The boards of directors of both companies unanimously approved the transaction.