Analog Devices To Buy Maxim Integrated For About $20 Billion

Semiconductor manufacturer Analog Devices said it will buy rival Maxim Integrated Products in an all-stock transaction worth $20.91 billion as chipmakers ride a rising wave of demand caused by more companies shifting to a work-from-home model.

Maxim shareholders will receive 0.630 shares of Analog under the deal, which translates to a premium of 22% based on Maxim's closing price on Friday. Maxim shares rose 17% to $75 in premarket trading Monday.

The market value of Maxim was $17 billion Friday, July 10. Post takeover, the combined entity is expected to have an enterprise value of nearly $70 billion.

The deal would be the largest takeover by Analog, which had bought Linear Technology for $14.8 billion four years ago.

The Maxim takeover would boost Analog’s presence in the auto market, which represented about 16% of its sales last year, a person with knowledge of the deal told the Financial Times. Analog reported $6 billion of sales in the latest fiscal and half of it came from industrial clients.

The deal reflects the soaring fortunes in the semiconductor industry as more people work from home due to the lockdown triggered by COVID-19, the Wall Street Journal said. Shares of semiconductor manufacturers have increased 12% in 2020, outperforming the wider U.S. market.

A global survey by Statista suggested semiconductor sales are expected to reach $433 billion worldwide in 2020. The industry’s year-on-year growth rate is expected to be 5.9%. The survey highlights the importance of semiconductors in the Artificial intelligence (AI) segment. In 2025, revenues from AI-related semiconductors worldwide is expected to rise to $65 billion from $17 billion generated in 2017.