Analog Devices is buying rival chipmaker Maxim Integrated Products for about $21 billion, the companies announced Monday.
The massive all-stock acquisition will make Massachusetts-based Analog a semiconductor giant valued at more than $68 billion and give it a stronger foothold in markets such as autonomous vehicles and 5G communications networks.
Both companies make integrated circuits — tiny chips used in cellphones, computers and many other devices — and serve a wide range of industries such as health care, transportation and consumer markets.
“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,” Analog President and CEO Vincent Roche said in a statement.
The news sent shares in California-based Maxim soaring 19.3 percent to $76.48 in premarket trading as of 7:29 a.m., while Analog’s stock price was recently up 2.3 percent at $127.40.
The terms of the deal will give Maxim stockholders 63 percent of an Analog share for each Maxim share they own. Current Analog shareholders will own about 69 percent of the combined company and Maxim shareholders will own the other 31 percent, the companies said.
Two Maxim directors — including President and CEO Tunç Doluca — will join Analog’s board after the deal closes, which is expected to happen in the summer of next year, according to a news release.
The companies touted the tie-up as “highly complementary” given Maxim’s strength in the automotive and data center markets and Analog’s position in the digital health care, communications and industrial segments. The combined firm is expected to bring in revenues of $8.2 billion.
“Analog Devices’ diverse market reach could help it hold up during a sharp, short-term pandemic-related disruption to demand and supply chains,” Bloomberg Intelligence senior analyst Woo Jin Ho wrote in a Monday note. “Its strength in 5G, data-center communications, energy and government helps buffer the pandemic headwinds.”
With Post wires