Analog to acquire Maxim for $20 billion

Analog Devices will acquire Maxim Integrated Products in an all-stick stock transaction worth US$20.5 billion.

It is the second largest deal in the semiconductor industry __ Avago Technologies acquired Broadcom for US$37 billion in 2016.

It is also Analog’s second large acquisition. It bought Linear Technology for US$15.9 billion three years ago.

The merger ratio between Analog and Maxim is 1 to 0.630. Shareholders of the respective companies will hold a 69% and 31% stake of the merged entity. Maxim CEO Tunc Doluca and two directors will join Analog’s board after the merger is complete.

Analog expects the process will wrap up by the second quarter of next year. The combined company will have annual sales of US$82 billion and cash flow of US$27 billion, it said.

The acquisition price of $20.5 billion won higher than Maxim’s market value of Us$11.7 billion. Analog said through the merger, it could support issues faced by application developers better.

According to IC Insights, there has been around 20 mergers and acquisitions in the semiconductor since last year to June of this year. The amount equaled US$28 billion, larger than the previous year’s US$25.9 billion. The year 2017 saw the highest number of mergers and acquisitions in terms of value, standing at US$28.1 billion.

Analog will now pose as a strong threat to Texas Instrument, the world’s largest analogue semiconductor maker. According to IC Insights, sales of Texas Instrument, Analog and Maxim were US$10.223 billion, US$5.55 billion and US$2.125 billion, respectively.