Analog Devices plans to acquire a rival firm in $20.91bn deal

13 Jul 2020451 Views

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With the acquisition of Maxim Integrated, Analog Devices aims to increase its expected annual revenue to $8.2bn and expand its customer base.

Today (13 July), US semiconductor company Analog Devices Inc (ADI) announced its plans to acquire San Jose-headquartered chipmaker Maxim Integrated in a $20.91bn all-stock deal.

In a statement, Analog Devices said that the deal values the combined enterprise at more than $68bn. Through the acquisition, it aims to strengthen its position as a leading semiconductor manufacturer, achieving increased scale across multiple markets.

Under the terms of the agreement, Maxim stockholders will receive 0.630 of a share of ADI common stock for each share of Maxim common stock they hold at the closing of the transaction. Analog Devices stockholders will hold roughly 69pc of the combined company, while Maxim stockholders will own the remaining 31pc.

The acquiring company said that Maxim’s strength in the automotive and data centre markets, combined with Analog’s strengths across industry, communications and digital healthcare, will be “highly complementary” and aligned with key sector growth trends.

The acquisition

According to Analog Devices, the strategic and financial rationale behind the deal includes the possibility of reaching expected revenue of $8.2bn and free cash flow of $2.7bn.

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It said that the deal will enhance domain expertise and engineering capabilities, enabling the combined company to offer more complete solutions, serve more than 125,000 customers and capture a larger share of an estimated $60bn total addressable market.

Vincent Roche, president and CEO of ADI, said: “Maxim is a respected signal processing and power management franchise with a proven technology portfolio and impressive history of empowering design innovation. Together, we are well positioned to deliver the next wave of semiconductor growth, while engineering a healthier, safer and more sustainable future.”

Upon the close of the deal, which is subject to regulatory approval, two Maxim directors will join the Analog Devices board of directors, including Maxim president and CEO Tunç Doluca.

Commenting on the deal, Doluca said: “For over three decades, we have based Maxim on one simple premise – to continually innovate and develop high-performance semiconductor products that empower our customers to invent.

“I am excited for this next chapter as we continue to push the boundaries of what’s possible, together with ADI. Both companies have strong engineering and technology know-how and innovative cultures. Working together, we will create a stronger leader, delivering outstanding benefits to our customers, employees and shareholders.”

The deal is expected to close in the summer of 2021, subject to customary closing conditions.

Kelly Earley is a journalist with Siliconrepublic.com

editorial@siliconrepublic.com