Semiconductor maker Analog Devices Inc sealed the United States' biggest merger this year on Monday, buying rival Maxim Integrated Products Inc for around $21 billion in a move to expand market share in automotive and 5G chipmaking.
The offer values Maxim at $78.43 per share, a premium of about 22% to its Friday close and Maxim shares were up 17% at $75 in premarket trading. Analog Devices shares rose just under 1%, suggesting investors tacitly approved.
Reuters had reported on Sunday night that Analog Devices was in advanced talks to acquire Maxim, gaining revenue and cost synergies, given the common focus of the two companies on integrated circuits.
The companies said in a statement the deal added Maxim's strength in automotive and data center markets to ADI's across broad industrial, communications and digital healthcare segments.
Based in Norwood, Massachusetts, Analog Devices provides sensors, data converters, amplifiers and other signal processing products to a range of industries from transportation and healthcare to instrumentation and portable consumer devices.
San Jose, California-based Maxim designs and manufactures analog chips that are used in cars, manufacturing, energy, communications, healthcare and connected devices.
Under the terms, Maxim stockholders will receive 0.630 of Analog Devices stock for each share they own, the companies said in a statement.
The deal is expected to add to adjusted earnings of the combined entity in about 18 months following the close, with $275 million in cost savings by the end of year two, they said.
Two Maxim directors, including Chief Executive Officer Tunc Doluca, will join Analog Devices' board.