US chipmaker Analog Devices to buy Linear Technology for about $14.8 bn
27 July 2016
US chipmaker Analog Devices Inc (ADI) yesterday struck a deal to buy rival Linear Technology Corp for about $14.8 billion, the latest among the several recent deals in the semiconductor industry.
The transaction comes a week after Japan's SoftBank Group Corp agreed to buy British chip designer ARM Holdings for $32 billion. (See: Softbank to acquire UK chipmaker ARM Holdings for $32 bn) Analog will pay $60 a share for rival Linear, in cash and stock - $46.00 per share in cash and 0.2321 a share, amounting to a 24 per cent premium to Linear's closing share price on Monday.
The transaction values Linear at approximately $60.00 per share, representing an equity value for Linear of around $14.8 billion, and the combined business at about $30 billion, with expected annual revenues of $5 billion.
ADI intends to fund the transaction with approximately 58 million new shares, approximately $7.3 billion of new long-term debt, and the remainder from the combined company's cash in hand.
One of the oldest chip maker, Analog and Linear Technology specialize in chips based on analog technologies that are used to handle signals such as sound, light heat or pressure. The acquisition of Linear will give Analog access to the market for chips that control power in devices.
Smartphones are one of the biggest users of analog chips, where they are used for a variety of tasks like helping to manage radio signals, and Apple is one of Analog's largest customers.
Not only will the acquisition of Linear enable Analog to diversify into new categories like power-management chips for handsets - one of the market's fastest-growing areas, but also emerge as a stronger rival to Texas instruments, the largest analog chip maker.
Founded in 1981 by Robert Swanson, JR and Robert Dobkin, Linear Technology designs, manufactures, and markets a broad line of high performance analog integrated circuits.
The California-based company makes products for applications that include telecommunications, cellular telephones, networking products, notebook and desktop computers, video/multimedia, industrial instrumentation, automotive electronics, factory automation, process control, military and space systems.
''The combination of Analog Devices and Linear Technology brings together two of the strongest business and technology franchises in the semiconductor industry,'' said Vincent Roche, president and CEO of Massachusetts-based Analog Device
''Our shared focus on engineering excellence and our highly complementary portfolios of industry-leading products will enable us to solve our customers' biggest and most complex challenges at the intersection of the physical and digital worlds,'' he added.
Bob Swanson, executive chairman and co-founder of Linear Technology, said, ''For 35 years, Linear Technology has had great success by growing its business organically. However, this combination of Linear Technology and Analog Devices has the potential to create a combination where one plus one truly exceeds two.''
''By combining our complementary areas of technology strength, we have an excellent opportunity to reinforce our leadership across the analog and power semiconductor markets, enhancing shareholder value.''