Analog Devices Acquires Linear Technology for $30 Billion

ADI LinearAnalog Devices and Linear Technology have announced that they 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 become one of the largest global analog technology companies with approximately $5 billion in anticipated annual revenues.

The combination of Analog Devices and Linear Technology brings together two of the strongest business and technology franchises in the semiconductor industry. Their shared focus on engineering excellence and their highly complementary portfolios of products will work very well for them. This unique combination of engineering talent, technology, and application domain expertise will create unparalleled innovation and support partner for customers.

Compelling Strategic and Financial Benefits

Global High-Performance Analog Industry Leader: Combination expected to create a global high-performance analog industry leader across data converters, power management, amplifiers, interface, and RF and microwave products

Highly Complementary Businesses: 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

Leading Positions & Commitment to Customers: Combined company expected to be a leader across all major high-performance analog product categories and will have a shared commitment to providing customers with the highest levels of innovation, service, and support

Accelerates Innovation and Revenue Growth in Attractive Markets: Unique combination of engineering excellence and domain expertise accelerates innovation and revenue growth opportunities in the industrial, automotive, and communications infrastructure markets

Best-in-Class Financial Model: Value of innovation and engineering excellence reflected in best-in-class financial model, non-GAAP margins, and free cash flow

Accretive Transaction: The transaction is expected to be immediately accretive to Analog Devices’ non-GAAP EPS and free cash flow. Analog Devices expects to achieve $150 million of annualized run-rate cost synergies within 18 months post transaction close

Following the transaction close, Mr. Roche, President and CEO of Analog Devices will continue to serve as President and CEO of the combined company, and David Zinsner, SVP and CFO of Analog Devices, will continue to serve as SVP and CFO of the combined company. Analog Devices and Linear Technology anticipate a combined company leadership team with strong representation from both companies across all functions. 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.

Transaction Structure and Terms

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 closing. The transaction values Linear Technology at approximately $60.00 per share, representing an equity value for Linear Technology of approximately $14.8 billion. Post-closing, Linear Technology shareholders will own approximately 16% of the combined company on a fully-diluted basis.

Analog Devices intends to fund the transaction with approximately 58 million new shares of Analog Devices common stock, approximately $7.3 billion of new long-term debt, and the remainder from the combined company’s balance sheet cash. The new long-term debt is supported by a fully underwritten bridge loan commitment and is expected to consist of term loans and bonds, with emphasis on pre-payable debt, to facilitate rapid deleveraging.

This transaction has been unanimously approved by the boards of directors of both companies. 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.