Following the transaction close, Mr. 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.
Transaction Structure and Terms
Under 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 approximately $60.00 per share(1), representing an equity value for Linear Technology of approximately $14.8 billion(1). Post-closing, Linear Technology shareholders will own approximately 16% of the combined company on a fully-diluted basis.
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 Financial Guidance
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 diluted earnings per share to be in the range of $0.71 to $0.72, and non-GAAP diluted earnings per share to be in the range of $0.77 to $0.78. The non-GAAP EPS estimate reflects estimated adjustments for amortization of purchased intangible assets and depreciation of step up value on purchased fixed assets, which total $19 million in the aggregate.
Credit Suisse is acting as exclusive financial advisor to Analog Devices, and Wachtell, Lipton, Rosen & Katz and Wilmer Cutler Pickering Hale and Dorr LLP are serving as its legal advisors. J.P. Morgan, Bank of America Merrill Lynch, and Credit Suisse are providing committed debt financing for the transaction. Qatalyst Partners is acting as exclusive financial advisor to Linear Technology, and Jones Day is serving as its legal advisor.
Conference call and Webcast Information
Analog Devices and Linear Technology management will host a conference call today, July 26, 2016 at 5:00pm ET to discuss details of the transaction. A live webcast and the accompanying presentation relating to the transaction will be available in the “investors” section of Analog Devices’ website at www.analog.com in advance of the conference call.
Investors may join via webcast, accessible at investor.analog.com, or by telephone (call 800-859-9560 ten minutes before the call begins and provide the password “ADI”).
A replay of the call will be made available and may be accessed for up to two weeks by dialing (855) 859-2056 (replay only) and providing the conference ID: 56173988, or by visiting investor.analog.com.
About Analog Devices
Analog Devices designs and manufactures semiconductor products and solutions. We enable our customers to interpret the world around us by intelligently bridging the physical and digital with unmatched technologies that sense, measure and connect. Visit http://www.analog.com.
About Linear Technology
Linear Technology, a member of the S&P 500, has been designing, manufacturing and marketing a broad line of high performance analog integrated circuits for major companies worldwide for over three decades. The company’s products provide an essential bridge between our analog world and the digital electronics in communications, networking, industrial, automotive, computer, medical, instrumentation, consumer, and military and aerospace systems. Linear Technology produces power management, data conversion, signal conditioning, RF and interface ICs, µModule® subsystems, and wireless sensor network products. For more information, visit www.linear.com.
(1) Based on Analog Devices’ 5-day volume weighted average price of $60.3215 as of July 21, 2016 per Bloomberg.
Forward Looking Statements
This press release contains forward-looking statements, which address
a variety of subjects including, for example, the expected timetable for
closing of the transaction between Analog Devices, Inc. (“Analog
Devices”) and Linear Technology Corporation (“Linear Technology”), the
expected benefits and synergies of the transaction, including the effect
of the transaction on Analog Devices’ revenues, non-GAAP earnings, free
cash flow, capital returns and expected growth rates of the combined
companies, Analog Devices’ expected product offerings, product
development, marketing position and technical advances resulting from
the transaction, the availability of debt financing for the transaction,
Analog Devices’ timing and ability to repay the debt and Analog Devices’
guidance for its third quarter of fiscal 2016. Statements that are not
historical facts, including statements about our beliefs, plans and
expectations, are forward-looking statements. Such statements are based
on our current expectations and are subject to a number of factors and
uncertainties, which could cause actual results to differ materially
from those described in the forward-looking statements. The following
important factors and uncertainties, among others, could cause actual
results to differ materially from those described in these
forward-looking statements: the ability to satisfy the conditions to
closing of the proposed transaction, on the expected timing or at all;
the ability to obtain required regulatory approvals for the proposed
transaction, on the expected timing or at all, including the potential
for regulatory authorities to require divestitures in connection with
the proposed transaction; the occurrence of any event that could give
rise to the termination of the merger agreement; the risk of stockholder
litigation relating to the proposed transaction, including resulting
expense or delay; higher than expected or unexpected costs associated
with or relating to the transaction; the risk that expected benefits,
synergies and growth prospects of the transaction may not be achieved in
a timely manner, or at all; the risk that Linear Technology’s business
may not be successfully integrated with Analog Devices’ following the
closing; the risk that Analog Devices and Linear Technology will be
unable to retain and hire key personnel; and the risk that disruption
from the transaction may adversely affect Linear Technology’s or Analog
Devices’ business and relationships with their customers,
suppliers or employees. For additional information about factors that
could cause actual results to differ materially from those described in
the forward-looking statements, please refer to both Analog Devices’ and
Linear Technology’s filings with the Securities and Exchange Commission
(“SEC”), including the risk factors contained in each of Analog Devices’
and Linear Technology’s most recent Quarterly Reports on Form 10-Q and
Annual Report on Form 10-K. Forward-looking statements represent
management’s current expectations and are inherently uncertain. Except
as required by law, we do not undertake any obligation to update
forward-looking statements made by us to reflect subsequent events or