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Analog Devices (ADI) Completes Linear Technology Buyout
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Analog Devices, Inc. (ADI - Free Report) , a leading supplier of analog and DSP integrated circuits, has completed the acquisition of Linear Technology. The company had agreed to acquire Linear’s business in a cash and stock deal worth $14.8 billion in Jul 2016.
Shares of Linear have been delisted from the NASDAQ Global Select Market.
Following the news, the share price of Analog Devices was up 0.68%. Coming to the price performance, over the last one year, shares of the company outperformed the Zacks characterized Semiconductor-Analog & Mixed industry. The stock returned 48.66% against the industry's gain of 47.79%.
Merger Benefits
The merger of these two companies will create an analog industry leader across a huge range of products, customer breadth and scale. The deal will expand Analog Devices' total addressable market to $14 billion from $8 billion, allowing it to cater to the phenomenal demand in some of the most attractive markets such as industrial, automotive and communications infrastructure markets.
Analog Devices’ President and Chief Executive Officer, Vincent Roche, said “Together, we are capable of solving more of our customers' biggest and most complex challenges at the intersection of the physical and digital domains. We expect that this combination will create tremendous value for our customers, our employees, and our shareholders for many years to come.”
Financial Impact
The acquisition is expected to be accretive to the company’s revenues in the upcoming quarter. Analog Devices expects the deal to add revenues between $160 and $170 million in the second quarter of fiscal 2017. This guidance includes a reduction of approximately $30 million related to a purchase accounting adjustment for Linear’s North America distributor deferred revenue.
Also, the company expects its non-GAAP interest and other interest expense to be approximately $60 million in the second quarter, $70 million in the third quarter and $60 million every quarter thereafter.
Our take
We believe Analog Devices’ acquisition strategy, continuous collaboration with innovative brands, development of new technology along with strengthening in Europe and China should benefit the company going forward.
Currently, Analog devices carries a Zacks Rank #2 (Buy). Stocks worth considering in the industry include Texas Instruments (TXN - Free Report) , sporting a Zacks Rank #1 (Strong Buy) and Xcerra Corporation and Internap Corporation , carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Texas Instruments delivered a positive earnings surprise of 7.09%, on average, in the trailing four quarters.
Xcerra Corporation delivered a positive earnings surprise of 187.5%, on average, in the trailing four quarters.
Internap Corporation delivered a positive earnings surprise of 10.88%, on average, in the trailing four quarters.
Zacks' 2017 IPO Watch List
Before looking into the stocks mentioned above, you may want to get a head start on potential tech IPOs that are popping up on Zacks' radar. Imagine being in the first wave of investors to jump on a company with almost unlimited growth potential? This Special Report gives you the current scoop on 5 that may go public at any time.
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Analog Devices (ADI) Completes Linear Technology Buyout
Analog Devices, Inc. (ADI - Free Report) , a leading supplier of analog and DSP integrated circuits, has completed the acquisition of Linear Technology. The company had agreed to acquire Linear’s business in a cash and stock deal worth $14.8 billion in Jul 2016.
Shares of Linear have been delisted from the NASDAQ Global Select Market.
Following the news, the share price of Analog Devices was up 0.68%. Coming to the price performance, over the last one year, shares of the company outperformed the Zacks characterized Semiconductor-Analog & Mixed industry. The stock returned 48.66% against the industry's gain of 47.79%.
Merger Benefits
The merger of these two companies will create an analog industry leader across a huge range of products, customer breadth and scale. The deal will expand Analog Devices' total addressable market to $14 billion from $8 billion, allowing it to cater to the phenomenal demand in some of the most attractive markets such as industrial, automotive and communications infrastructure markets.
Analog Devices’ President and Chief Executive Officer, Vincent Roche, said “Together, we are capable of solving more of our customers' biggest and most complex challenges at the intersection of the physical and digital domains. We expect that this combination will create tremendous value for our customers, our employees, and our shareholders for many years to come.”
Financial Impact
The acquisition is expected to be accretive to the company’s revenues in the upcoming quarter. Analog Devices expects the deal to add revenues between $160 and $170 million in the second quarter of fiscal 2017. This guidance includes a reduction of approximately $30 million related to a purchase accounting adjustment for Linear’s North America distributor deferred revenue.
Also, the company expects its non-GAAP interest and other interest expense to be approximately $60 million in the second quarter, $70 million in the third quarter and $60 million every quarter thereafter.
Our take
We believe Analog Devices’ acquisition strategy, continuous collaboration with innovative brands, development of new technology along with strengthening in Europe and China should benefit the company going forward.
Analog Devices, Inc. Price and Consensus
Analog Devices, Inc. Price and Consensus | Analog Devices, Inc. Quote
Zacks Rank & Other Stocks to Consider
Currently, Analog devices carries a Zacks Rank #2 (Buy). Stocks worth considering in the industry include Texas Instruments (TXN - Free Report) , sporting a Zacks Rank #1 (Strong Buy) and Xcerra Corporation and Internap Corporation , carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Texas Instruments delivered a positive earnings surprise of 7.09%, on average, in the trailing four quarters.
Xcerra Corporation delivered a positive earnings surprise of 187.5%, on average, in the trailing four quarters.
Internap Corporation delivered a positive earnings surprise of 10.88%, on average, in the trailing four quarters.
Zacks' 2017 IPO Watch List
Before looking into the stocks mentioned above, you may want to get a head start on potential tech IPOs that are popping up on Zacks' radar. Imagine being in the first wave of investors to jump on a company with almost unlimited growth potential? This Special Report gives you the current scoop on 5 that may go public at any time.
One has driven from 0 to a $68 billion valuation in 8 years. Four others are a little less obvious but already show jaw-dropping growth. Download this IPO Watch List today for free >>