Analog Devices is close to a deal to buy rival semiconductor maker Maxim Integrated Products in an all-stock transaction worth about $20bn, according to people briefed on the matter.
The deal, which could be announced as soon as Monday, would rank as one of the year’s largest takeovers after months of muted activity during the coronavirus pandemic. A spurt of dealmaking over the past two weeks, including Uber’s $2.65bn purchase of Postmates and Berkshire Hathaway’s $9.7bn takeover of Dominion Energy’s natural gas transmission business, has reinvigorated what had been a listless year for mergers and acquisitions.
The takeover by Analog would create a company with a combined enterprise value of nearly $70bn. Maxim, based in San Jose, California, had a market value of $17bn on Friday.
The group makes semiconductors used in automobiles, ultrasound devices and mobile phones and generated $2.3bn of revenues in its last fiscal year. Maxim shareholders will own close to 30 per cent of the combined group.
An agreed deal would mark the biggest takeover by Analog since it to bought Linear Technology for $14.8bn four years ago. It comes as chipmakers have seen an uptick in demand over the past fours months due to widespread work-from-home orders amid coronavirus crisis. Shares of semiconductor manufacturers have increased 12 per cent this year, outpacing the broader US stock market.
A takeover of Maxim would expand Analog’s offerings and boost its presence in the auto market, which represented about 16 per cent of its sales last year, according to one person with knowledge of the deal. Analog reported $6bn of sales in its fiscal last year, half of which were from industrial clients.
Analog Devices management will continue to lead the combined company, one of the people added.
Analog and Maxim both make analogue semiconductors, which help convert real world stimuli into electronic signals, an area that is expected to see huge growth as automation across industries accelerates. The combined entity would create a bigger rival to, Texas Instruments, the industry leader.
Consolidation has been rife in the semiconductor industry in recent years, although some of the largest transactions have faced intense regulatory scrutiny. Singapore’s Broadcom in 2018 was forced to withdraw its $142bn offer to buy Qualcomm, which would have been the largest technology deal in history, after US President Donald Trump blocked the deal because of national security concerns.
But several smaller deals have ultimately been approved. Germany’s Infineon Technologies last year agreed to buy US rival Cypress Semiconductor for €9bn, while Dutch semiconductor group NXP acquired the WiFi business of Marvell Technology Group for $1.8bn.
Analog and Maxim declined to comment.
The news was earlier reported by the Wall Street Journal.