Analog Devices to buy Maxim Integrated for $21 billion

In one of the largest deals of the year, semiconductor manufacturer Analog Devices announced on Monday that it would buy competitor Maxim Integrated for $21 billion, merging second- and third-largest analog semiconductor companies into a conglomerate that will go toe-to-toe with larger rival Texas Instruments (TXN).

The all-stock deal, which is expected to close this summer, would put Analog’s market valuation at over $68 billion.

“With the increased breadth and depth of our combined technology and talent, we will be able to develop more complete, cutting-edge solutions,” said Vincent Roche, Analog’s President and CEO, in a statement.

The market for semiconductors — the microscopic crystals that make up micochips — has surged in the last few years. As tech companies incorporate microchips into everyday appliances, including washing machines and cars, semiconductors will be key in developing the so-called internet of things and 5G-connected gadgets.

Analog — which focuses on industry, communications, and digital healthcare — will absorb Maxim’s capabilities in automotive and data center markets.

This is Analog’s largest deal ever, and is expected to generate $8.2 billion in revenue. Maxim’s (MXIM) stock soared 8% Monday, while Analog’s (ADI) stock fell 6%. Under the agreement, Maxim shareholders would receive 0.63 shares for each share of Maxim’s stock, and would own 31% of the total company.

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