Semiconductor giant Analog Devices Inc. (ADI) announced an acquisition deal with its rival, Maxim Integrated Products, Inc., through an all-stock transaction worth over US$20 billion [AU$28 billion].
In a recent press release from the Analog Devices website, Maxim stockholders will get 0.630 of a share of ADI common stock for each share of Maxim common stock they hold at the closing of the transaction.
“Upon closing, current ADI stockholders will own approximately 69% of the combined company, while Maxim stockholders will own approximately 31%,” per the release.
In addition, the transaction is expected to close in the summer of 2021, taking into account to the satisfaction of customary closing conditions. These conditions include receipt of U.S. and some non-U.S. regulatory approvals, and approval by stockholders of both companies.
The move from Analog Devices Inc. to acquire Maxim Integrated Products inc. is now the largest deal of the year, overshadowing its $12.8 billion purchase of Linear Technology, as pointed out by Bloomberg.
In fact, this company just released a new product that will make the implementation of cybersecurity simpler than ever before.
Analog Devices Inc. dominates the semiconductor space
With major tech companies competing with each other to provide the best technological innovations despite the pandemic, it looks like investors are seeing some value with both Analog Devices and its rival Maxim Integrated.
This year alone, Analog Devices has collaborated with Hyundai Motor Company last January for the automotive industry’s first all-digital road noise cancellation system.
As for Maxim, they had their own semiconductor acquisitions throughout the years. As per Crunchbase, Maxim Integrated has acquired a total of 9 companies including Icron Technologies last 2018.
Maxim was also added to the S&P 500 and it looks like this acquisition from ADI may influence this week’s Wall Street rally.
Both companies had a decent recovery since March
The semiconductor industry has been one of the most resilient sectors in Nasdaq. The stock price movement of Analog Devices and Maxim Integrated are moving upward since March.
As of this writing, both stock prices have increased by over 50%.
Since the deal is expected to close by the summer of 2021, traders and investors may expect that either the news of the acquisition has been priced in or they would buy in the hype.
This week’s highlight for the U.S. markets also features the release of earnings reports by some companies listed in Wall Street which is forecasted to be the worst season for the year, per CNBC.