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Analog Devices Buys Linear Technology in $14.8 Billion Deal

On Tuesday, Analog Devices said that it planned to acquire analog chipmaker Linear Technology for $14.8 billion, adding to the rapid consolidation in the chip industry.

The deal combines two big makers of analog and mixed-signal chips. While both companies are known for making data converters that translate things like touch or sound into electrical signals, they also specialize in integrated circuits for RF and microwave systems. Both companies said that the deal would help them expand their industrial, automotive, and communications technology.

“The combination of Analog Devices and Linear Technology brings together two of the strongest business and technology franchises in the semiconductor industry,” Vincent Roche, president and chief executive of Analog Devices, in a statement.

The cash and stock deal values the combined company at around $30 billion. Analog Devices anticipates yearly revenues at the new company to increase to around $5 billion. For Linear Technology shareholders, the acquisition pays out at $46 a share.

The chip industry has been consolidating rapidly over the last two years, with acquisitions and mergers piling up like pencil shavings. Last year, Avago Technologies and Broadcom merged in a $37 billion deal, creating a combined analog and digital wireless chipmaker called Broadcom Ltd. Earlier this month, Infineon, which competes with Linear Technology, said that it was buying Cree's Wolfspeed division for a similar medley of power and radio components earlier this month.

While computing spreads, analog and mixed-signal chipmakers have been among the biggest targets in the industry consolidation. The cost and complexity of analog design and manufacturing has continued increasing in recent years, and companies are having trouble finding analog engineers in a sea of digital designers.

The companies said that their executive ranks would be a combination of both sides. Analog Devices will retain the Linear Technology brand to sell its power management products, but the combined company will trade on the stock market under Analog Devices.

 “For 35 years, Linear Technology has had great success by growing its business organically," Bob Swanson, executive chairman and co-founder of Linear Technology, said in a statement. "However, this combination of Linear Technology and Analog Devices has the potential to create a combination where one plus one truly exceeds two."

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