NSM) for $6.5 billion, which equates to a fat 78% premium over National's closing share price of $14.07 before the deal hit the wires. National Semiconductor is known for developing analog-intensive products that provide greater energy efficiency, better audio and sharper images in electronic systems. Texas Instruments said it plans to finance the deal by borrowing $3 billion to $4 billion and paying the rest in cash. The acquisition will now make Texas Instruments the world's third-largest semiconductor maker behind Intel ( INTC) and Samsung Electronics. Anyone who's bullish on the market in general right now must love this news. Technicians had been taking issue with the semiconductor sector after its lack of participation in the rally, but this merger should change that view -- especially if it sparks a rally with legs. Related: 6 Precious Metals Stocks Set to Explode I would look for a breakout in the Semiconductor Holders ( SMH) above overhead resistance at $37 a share for confirmation that a possible new bull market in the space is setting up. Something else to consider is that if you're short any of the beaten-down semiconductor stocks, then you're going to be thinking twice about betting against these names. Nobody who's short a stock wants to wake up in the morning and have to worry if one of his positions could go up 70% against him. This merger could easily embolden the bulls to start a buying spree in the semi space -- and scare the short-sellers out of their bearish bets. What this also means is that the semi complex could be ripe for more acquisitions since many of the stocks are already trading far below previous levels. Whenever I see something like this unfold, the first thing I do is make a list of the most attractive names and some of the most heavily shorted names. Basically, this offers two ways to win: either by reaping the rewards of a massive short squeeze or from value players stepping in to support depressed stock prices. The growth guys will follow the value guys, and if all goes well, some names will be acquired and others will just be great trades that squeeze the shorts into the stratosphere. With this in mind, let's take a look at some semi stocks that could be excellent takeover and short squeeze candidates.