ADI strengthens leadership with Maxim Integrated acquisition
Analog Devices, Inc., and Maxim Integrated Products, Inc., have entered into a definitive agreement under which ADI will acquire Maxim in an all stock transaction that values the combined enterprise at over $68 billion [2]. The transaction, which was unanimously approved by the Boards of Directors of both companies, aims to strengthen ADI as an analogue semiconductor leader with increased breadth and scale across multiple attractive end markets.
“Today’s exciting announcement with Maxim is the next step in ADI’s vision to bridge the physical and digital worlds. ADI and Maxim share a passion for solving our customers’ most complex problems, and with the increased breadth and depth of our combined technology and talent, we will be able to develop more complete, cutting-edge solutions,” said Vincent Roche, President and CEO of ADI. “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 for all.”
“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,” said Tunç Doluca, President and CEO of Maxim Integrated.
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. Upon closing, current ADI stockholders will own approximately 69 percent of the combined company, while Maxim stockholders will own approximately 31 percent. The transaction is intended to qualify as a tax-free reorganisation for U.S. federal income tax purposes.
Upon closing, two Maxim directors will join ADI’s Board of Directors, including Maxim President and CEO, Tunç Doluca.
The combination strengthens ADI’s analogue semiconductor leadership position with expected revenue of $8.2 billion [1] and free cash flow of $2.7 billion [1] on a pro forma basis. Maxim’s strength in the automotive and data centre markets, combined with ADI’s strength across the broad industrial, communications and digital healthcare markets are highly complementary and aligned with key secular growth trends. With respect to power management, Maxim’s applications-focused product offerings complement ADI’s catalogue of broad market products.
Combining best-in-class technologies will enhance ADI’s depth of domain expertise and engineering capabilities from DC to 100 gigahertz, nanowatts to kilowatts and sensor to cloud, with more than 50,000 products. This will enable the combined company to offer more complete solutions, serve more than 125,000 customers and capture a larger share of a $60 billion total addressable market [3].
The combination brings together similar cultures focused on talent, innovation and engineering excellence with more than 10,000 engineers and approximately $1.5 billion [1] in annual research and development investment.
This transaction is expected to be accretive to adjusted EPS in 18 months subsequent to closing with $275 million of cost synergies by the end of year two, driven primarily by lower operating expenses and cost of goods sold. Additional cost synergies from manufacturing optimisation are expected to be realised by the end of year three subsequent to closing.
The transaction is expected to close in the summer of 2021, subject to the satisfaction of customary closing conditions, including receipt of U.S. and certain non-U.S. regulatory approvals, and approval by stockholders of both companies.
https://investor.analog.com
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[1] Based on FY19 reported financials for ADI and trailing twelve months ending September 28, 2019 for Maxim.
[2] Based on share price as of July 10, 2020 fully diluted shares and latest reported net debt.
[3] Source: WSTS Semiconductor Forecast for Analog in 2023.
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