Analog Devices Announces Acquisition of Maxim Integrated to Strengthen Its Analog Semiconductor Market Leadership

Latest update time：2020-07-14

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Continued growth with $8.2 billion in revenue1 ^{product
portfolio, expanding scale and diversity}

Increase professional domain knowledge and expand engineering and technical capabilities to develop more complete solutions to solve customers' complex problems and challenges
Transaction expected to be accretive to free cash flow at closing and accretive to adjusted earnings per share (EPS) within 18 months of closing, with $275 million of cost synergies expected to be realized by the end of the second year

Analog Devices, Inc. and Maxim Integrated Products, Inc. announced on July 13 that they have reached a definitive agreement for ADI to acquire Maxim in an all-stock transaction with a combined market value of more than $ ⁶⁸ billion2 . The boards of directors of both companies have unanimously approved the transaction. This transaction will strengthen ADI's analog semiconductor leadership by expanding its business breadth and scale in multiple attractive end markets.

Under the terms of the agreement, upon closing of the transaction, each share of Maxim common stock held will be exchanged for 0.630 shares of ADI common stock. Upon closing of the transaction, current ADI shareholders will own approximately 69% of the combined company, while Maxim shareholders will own approximately 31%. The transaction is intended to qualify as a tax-free reorganization under U.S. federal income tax laws.

“Today’s exciting announcement with Maxim is the next step in ADI’s vision to bridge the physical and digital worlds,” said Vincent Roche, president and CEO of ADI . “Both ADI and Maxim share a passion for solving our customers’ complex problems, and together we will have the breadth and depth of our technology and talent to develop more complete, leading-edge solutions. Maxim is a renowned signal processing and power management company with a proven technology portfolio and an impressive history of design innovation. Together, we are poised to deliver the next wave of growth in the semiconductor industry while creating a healthier, safer, and more sustainable future for all.”

“For more than three decades, we have been driven by a shared belief: to innovate and develop high-performance semiconductors that enable our customers’ inventions,” said Tunç Doluca, president and CEO of Maxim Integrated . “I am excited to continue to push the boundaries of what is possible together with Analog Devices. Both of our companies have deep engineering expertise and a strong culture of innovation. Together, we will create an even stronger industry leader that will deliver exceptional value for our customers, employees, and shareholders.”

Upon closing of the transaction, two Maxim directors will join ADI’s board of directors, including Maxim President and CEO Tunç Doluca.

Compelling strategic and financial rationale

Industry Leaders Expanding Global Presence: The combination strengthens ADI’s leadership in the analog semiconductor market with expected revenues of $8.2 billion1 and free cash flow of $2.7 billion1 on a pro forma basis ^. Maxim ’s ^strength in the automotive and data center markets complements ADI’s strength across a broad range of industrial, communications and digital medical markets, driving key long-term growth trends. In power management, Maxim’s application-focused product offerings complement ADI’s broad-market product categories.
Rich professional domain knowledge and technical capabilities: The integration of industry-leading technologies will further strengthen ADI's professional domain knowledge and engineering capabilities, spanning from DC to 100 GHz, from nanowatts to kilowatts, from sensors to the cloud, covering more than 50,000 products. The combined company can provide more complete solutions, serve more than 125,000 customers, and seize opportunities in a total addressable market of $60 ^billion .
Shared philosophy of innovation-driven growth: The two companies share a similar corporate culture that values talent, innovation and engineering excellence, with more than 10,000 engineers and annual R&D investment of nearly $ ^1.5 billion1 . The combined company will continue to attract top engineering talent in a variety of fields.
Earnings Accretion and Cost Savings: The transaction is expected to be accretive to adjusted earnings per share within 18 months of closing due to lower operating expenses and cost of goods sold, with cost synergies of $275 million expected by the end of year two. Additional cost synergies are expected to be realized from manufacturing process optimization by the end of year three after closing.
Strong Financial Strength and Cash Flow Capacity: ADI expects the combined company to have a stronger balance sheet, with an estimated net leverage ratio of approximately 1.2x ^4. The transaction is also expected to be accretive to free cash flow at closing, resulting in greater returns for shareholders.

Timing and Approvals

The transaction is expected to close in the summer of 2021, subject to satisfaction of closing conditions, including U.S. and non-U.S. regulatory approvals and approval by shareholders of both companies.

About Analog Devices

Analog Devices, Inc. is a global leader in high-performance analog technology, dedicated to solving the toughest engineering design challenges. With outstanding technologies that sense, measure, power, connect and interpret, we build an intelligent bridge between the physical and digital worlds, helping customers to redefine the world around them.

About Maxim Integrated

Maxim Integrated is committed to developing innovative analog and mixed-signal products and technologies to make systems smaller and smarter while enhancing their safety performance and improving energy efficiency. We help customers innovate in the fields of automotive, industrial, health, mobile consumption, and cloud data centers, providing industry-leading solutions to make the world a better place.

^1Based on ADI’s fiscal 2019 financials and Maxim’s financials for the 12 months ended September 28, 2019

² Based on fully diluted share price and latest reported net debt as of July 10, 2020

^3Data source: WSTS 2023 simulated semiconductor forecast

⁴ Based on most recent quarter-end reports: ADI, May 2, 2020; Maxim, March 28, 2020

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