ADI makes $20B swoop on Maxim

Semiconductor company Analog Devices, Inc. (ADI) has agreed to the $20 billion purchase of rival Maxim Integrated in an all-stock transaction. The proposed takeover is one of the biggest M&A moves of the year.

The combined enterprise value of the bulked-up entity, ostensibly aimed at better competing with Texas Instruments and to make deeper inroads into the growing chip market for cars, is a huge $68 billion.

Under the terms of the deal, ADI shareholders will hold around 69% of the combined entity with Maxim shareholders accounting for the remainder.

If all goes to plan, ADI and Maxim reckon the tie-up will generate $275 million in "cost synergies" within two years of closing, and be accretive to adjusted EPS in 18 months.

The deal, assuming it gets regulatory approval, is expected to be wrapped up in the summer of 2021.

Both Analog and Maxim play in the analog semiconductor space, which takes measurements from the physical world (temperature, speed, sound, electrical currents and so on) and converts them into digital information.

A sizable portion of Analog's business comes from industrial clients, while Maxim primarily supplies analog chips for cars, mobile phones and the healthcare sector.

ADI's CEO Vincent Roche, in the official takeover statement, talked of the company's vision to "bridge the physical and digital worlds."

He then heaped praise on ADI's rival. "Maxim is a respected signal processing and power management franchise with a proven technology portfolio and impressive history of empowering design innovation," purred Roche.

ADI had a $6 billion turnover in its last fiscal year, while Maxim chipped in [Ed note: groan] with $2.3 billion.

— Ken Wieland, contributing editor, special to Light Reading

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