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Analog Devices – Maxim Integrated Products Deal

Updated: Jul 19, 2020

What is it about?

On Monday 13th July, Analog Devices (ADI) announced that it is planning to buy its rival Maxim Integrated Products for about $21 billion. ADI’s shareholders will hold 69% of the newly combined company and Maxim’s shareholders will own the rest. The combination of these two semiconductor companies will create a chipmaking powerhouse worth about $68 billion and will help them to reduce the gap with their competitor, Texas Instruments, which is valued around $121.6 billion. This will be an all-stock transaction, which means Maxim will receive Analog’s shares as payment for the transaction.

Thinking beyond

M&A market has been frozen for months after the outbreak of the Covid-19 pandemic. With people staying at home and businesses temporally being closed, many companies collapsed and went through restructuring or even winding up. For those who luckily survived, they have postponed planned deals to cope with the current uncertainty.

However, it seems like the technology industry has been quick in recovering and are resuming lucrative M&A activities. Covid-19 has digitalised many parts of people’s lives and this is giving an extra boost to transactions in already flourishing technology businesses that deal with software, e-commerce, e-pay, e-learning and e-health. For ADI, the acquisition of Maxim will allow it to access Maxim’s strong position in the automotive and data centre markets. This is important because with more people now working and socialising online, cloud computing and data centre have become even more crucial. Since both ADI and Maxim specialise in power protection and management of data centres, a combination of their businesses will allow them to thrive in the growing data centre market.

The new normal introduced by Covid-19 is accelerating the development of the technology industry. It is expected that more M&A transactions will be coming in the next few months as the needs for various technological services grow.

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