Analog Devices To Acquire Linear Technology In $14.8 Bln Deal

(RTTNews) - Analog Devices Inc. (ADI) said that it agreed to acquire Linear Technology Corp. (LLTC) in a cash and stock transaction that values the combined enterprise at about $30 billion.

Upon completion of the acquisition, Analog Devices will be the premier global analog technology company with about $5 billion in anticipated annual revenues.

As per the terms of the agreement, Linear Technology shareholders will receive $46.00 per share in cash and 0.2321 of a share of Analog Devices common stock for each share of Linear Technology common stock they hold at closing. The transaction values Linear Technology at about $60.00 per share, representing an equity value for Linear Technology of about $14.8 billion. Post-closing, Linear Technology shareholders will own approximately 16% of the combined company on a fully-diluted basis.

The transaction is expected to be immediately accretive to Analog Devices' non-GAAP earnings per share and free cash flow. Analog Devices expects to achieve $150 million of annualized run-rate cost synergies within 18 months post transaction close.

Following the transaction close, Vincent Roche, President and CEO of Analog Devices will continue to serve as President and CEO of the combined company, and David Zinsner, SVP and CFO of Analog Devices, will continue to serve as SVP and CFO of the combined company. Analog Devices and Linear Technology anticipate a combined company leadership team with strong representation from both companies across all functions. The Linear Technology brand will continue to serve as the brand for Analog Devices' power management offerings. The combined company will use the name Analog Devices, Inc. and continue to trade on the NASDAQ under the symbol ADI.

Analog Devices intends to fund the transaction with approximately 58 million new shares of Analog Devices common stock, approximately $7.3 billion of new long-term debt, and the remainder from the combined company's balance sheet cash. The new long-term debt is supported by a fully underwritten bridge loan commitment and is expected to consist of term loans and bonds, with emphasis on pre-payable debt, to facilitate rapid deleveraging.

This transaction has been unanimously approved by the boards of directors of both companies. Closing of the transaction is expected by the end of the first half of calendar year 2017, and is subject to regulatory approvals in various jurisdictions, the approval of Linear Technology's shareholders, and other customary closing conditions.

Analog Devices also narrowed and raised its financial guidance for its third quarter of fiscal year 2016, for revenue to be approximately $865 million, and for earnings per share to be in the range of $0.71 to $0.72, and non-GAAP earnings per share to be in the range of $0.77 to $0.78.

ADI closed Tuesday's regular trading at $62.87, up $2.34 or 3.87 percent. In the after-hours, the stock further gained $5.26 or 8.36 percent.

LLTC closed Tuesday's regular trading at $62.49, up $14.02 or 28.93 percent. However, in the after-hours, the stock dropped $1.05 or 1.68 percent.