Analog Devices Announces Definitive Agreement to Acquire Linear Technology

July 27 2016, 03:10
Consolidation continues in the electronic components’ industry. This time is Analog Devices acquiring Linear Technology, the established manufacturer of analog integrated circuits for power management, data conversion, signal conditioning, RF and interface ICs, µModule subsystems, and wireless sensor network products. According to Analog Devices, highly complementary product portfolios, engineering talent, technology, and application domain, creates an industry leader across all its major product categories.

According to the announcement made by Analog Devices on July 26, 2016 - the same day Linear Technology reported its result for the previous quarter (both companies are NASDAQ listed) - the companies have entered into a definitive agreement under which Analog Devices will acquire Linear Technology in a cash and stock transaction that values the combined enterprise at approximately $30 billion. Upon completion of the acquisition, Analog Devices will be the premier global analog technology company with approximately $5 billion in anticipated annual revenues.

Under the terms of the agreement, Linear Technology shareholders will receive $46.00 per share in cash and 0.2321 of a share of Analog Devices common stock for each share of Linear Technology common stock they hold at the closing of the transaction. The transaction values Linear Technology at approximately $60.00 per share, representing an equity value for Linear Technology of approximately $14.8 billion.

Linear Technology Corporation, a member of the S&P 500, has been designing, manufacturing and marketing a broad line of high performance analog integrated circuits for major companies worldwide for over three decades. The Company’s products provide an essential bridge between the analog world and the digital electronics in communications, networking, industrial, automotive, computer, medical, instrumentation, consumer, and military and aerospace systems. Linear Technology employs more than 7,500 across its manufacturing facilities in California and Washington in the US, with Test and Assembly facilities in Singapore and Malaysia, and Design Centers in Arizona, California (3), Colorado, Massachusetts, New Hampshire, North Carolina, Texas and Vermont in the US, and in Munich, Germany, Hangzhou, China, and Singapore.

Closing of the transaction is expected by the end of the first half of calendar year 2017, and is subject to regulatory approvals in various jurisdictions, the approval of Linear Technology’s shareholders, and other customary closing conditions.

“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 Chief Executive Officer of Analog Devices. “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. We are creating an unparalleled innovation and support partner for our industrial, automotive, and communications infrastructure customers, and I am very excited about what this acquisition means for our customers, our employees, and our industry. ”

Bob Swanson, Executive Chairman and Co-founder of Linear Technology, added, “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. As a result, the Linear Technology Board concluded that this is a compelling transaction that delivers substantial value to our shareholders, and the opportunity for additional upside through stock in the combined company. Analog Devices is a highly respected company. 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. Together, Linear Technology and Analog Devices will advance the technology and deliver innovative analog solutions to our customers worldwide. We are committed to working with the ADI team to ensure a smooth transition.”
Analog Devices booth at electronica 2014 in Munich, Germany.

Highly complementary product portfolios create the industry’s most comprehensive suite of high-performance analog offerings and expand Analog Devices’ total addressable market to $14 billion from $8 billion. The combined company is expected to be a leader across all major high-performance analog product categories, with expertise to accelerate innovation and revenue growth opportunities in all application markets.

On the day of the acquisition announcement, Linear Technology reported financial results for the fiscal quarter ended July 3, 201, with revenues of $373.8 million increased 3.5% over the previous quarter and decreased 1.5% from the fourth quarter of fiscal year 2015. Net income of $132.4 million increased $4.0 million or 3.1% over the previous quarter’s net income. This is the third sequential quarter of revenue growth for the company.

“We have tremendous respect and admiration for the franchise created by Linear Technology. I have no doubt that the combination of our two companies will create a trusted leader in our industry, capable of generating tremendous value for all of our stakeholders,” adds Vincent Roche, which, after the closing of the transaction will remain as President and CEO of the combined company, with David Zinsner, SVP and CFO of Analog Devices, continuing to serve as SVP and CFO of the combined company. The Linear Technology brand will continue to serve as the brand for Analog Devices’ power management offerings. The combined company will use the name Analog Devices, Inc. and continue to trade on the NASDAQ under the symbol ADI. |
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