- 400B semiconductor industry
Analog Devices (ADI) will acquire Maxim in an all-stock transaction that values combined enterprise at $68 bln+; expected to be accretive to free cash flow at closing and adj. EPS in 18 months post-close
Under the terms of the agreement, Maxim stockholders will receive 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 approx. 69% of the combined company, while Maxim stockholders will own approx. 31%. The transaction is intended to qualify as a tax-free reorganization for U.S. federal income tax purposes.
This transaction is expected to be accretive to adjusted EPS in 18 months subsequent to closing with $275 mln of cost synergies by the end of year two, driven primarily by lower operating expenses and cost of goods sold. Additional cost synergies from manufacturing optimization are expected to be realized by the end of year three subsequent to closing. ADI expects the combined company to yield a stronger balance sheet, with a pro forma net leverage ratio of approx. 1.2x. This transaction is also expected to be accretive to free cash flow at close, enabling additional returns to shareholders. The transaction is expected to close in the summer of 2021, subject to the satisfaction of customary closing conditions, including receipt of certain regulatory approvals.