Chip maker Analog Devices Inc. said Monday it has agreed to acquire Maxim Integrated Products Inc. in an all-stock deal with a combined enterprise value of over $68 billion. The deal “will strengthen ADI as an analog semiconductor leader with increased breadth and scale across multiple attractive end markets,” the companies said in a statement. Under the terms of the deal, Maxim shareholders will receive 63 cents of ADI common stock for each share owned. ADI shareholders will own 69% of the new entity, while Maxim shareholders own the remaining 31%. The combined entity is expected to have revenue of $8.2 billion and free cash flow of $2.7 billion on a pro forma basis. The deal is expected to boost adjusted per-share earnings in 18 months after closing, and to generate cost synergies of $275 million. The deal is expected to close in the summer of 2021. Separately, ADI raised its third-quarter guidance, saying it now expects revenue of about $1.45 billion, plus or minus $30 million. That compares with prior guidance of $1.32 billion, plus or minus $70 million provided on May 20. The company expects adjusted EPS of $1.33, plus or minus 5 cents, compared with earlier guidance for $1.08, plus or minus 11 cents. “The guidance increase is driven by better than expected demand across ADI’s end markets with particular strength in Communications and Industrial. This upside in demand has resulted in less cancellations and higher than anticipated backlog conversion,” the company said. ADI shares rose 0.9% premarket, while Maxim shares were up 17%.
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