The enterprise value of the transaction is $68 billion.
Under the terms of the agreement, Maxim stockholders will receive just under two-thirds of a share of ADI common stock for each share of Maxim common stock they hold at the closing of the transaction, which is expected to occur next summer.
Upon closing, current ADI stockholders will own approximately 69% of the combined company, while Maxim stockholders will own approximately 31%, the companies said. Two Maxim directors will join ADI’s board, including Maxim CEO Tunc Doluca.
The deal values San Jose-based Maxim well above its current market capitalization of roughly $17 billion. Norwood, Mass.-based Analog has a market value of $46 billion. Still, the combined company will still lag behind Texas Instruments (TXN) - Get Report, the leader in analog semiconductors, which has a $119 billion market value.
Maxim’s focus on the automotive and data center markets combined with ADI’s strength in industrial, communications and digital healthcare are “highly complementary and aligned with key secular growth trends,” the companies said.
Indeed, ADI's pivot toward health-related products amid the coronavirus pandemic has helped bolster it earnings, even as sales have somewhat lagged.
ADI in May reported stronger-than-expected adjusted profit for its fiscal second quarter, though revenue lagged forecasts, with adjusted profit of $1.08 a share, above analysts' forecasts of $1.03 a share. Revenue fell 14% to $1.32 billion from $1.53 billion.
Shares of Maxim were up 13.08% at $72.47 in trading on Monday, while shares of ADI were down 3.13% at $121.60.