Analog Devices to Buy Chipmaker Hittite for About $2 Billion

Jun 09, 2014 4:21 pm ET

(Updates with closing share price in sixth paragraph.)

June 9 (Bloomberg) -- Analog Devices Inc., a maker of semiconductors used in wireless-phone systems, will acquire Hittite Microwave Corp. for about $2 billion to gain chips used by automakers and the military.

Analog Devices will pay $78 a share in cash for Chelmsford, Massachusetts-based Hittite, according to a statement today. That’s 29 percent more than Hittite’s closing price on June 6. Both chipmakers’ boards approved the deal.

Acquiring Hittite will give Analog Devices a broader line of products used in satellite gear, military radar and cars. The company is seeking to tap growing demand for chips that power advanced functions in daily life, such as blind-spot detection and automatic emergency braking in autos. The transaction will increase Analog Devices’ earnings per share, excluding some items, according to the statement.

“Hittite’s product focus is highly complementary to our own,” Analog Devices Chief Executive Officer Vincent Roche said on a conference call today. “From a growth perspective, this transaction expands product offerings in our key end markets and allows us to address new opportunities.”

Chip Deals

The deal is the third acquisition of a U.S. maker of integrated circuits for more than $1 billion this year, and the largest, according to data compiled by Bloomberg. It topped RF Micro Devices Inc.’s planned purchase of TriQuint Semiconductor Inc. for about $1.5 billion.

Analog Devices rose 5 percent to $55.31 at the close in New York. Shares of the company, which is based about 40 miles (64 kilometers) from Chelmsford in Norwood, Massachusetts, have gained 20 percent in the past 12 months, compared with a 19 percent increase in the Standard & Poor’s 500 Index. Hittite, which had risen 12 percent in the year through June 6, jumped to $77.90 today.

The transaction is expected to close at the end of Analog Devices’ fiscal third quarter, in about two months.

Credit Suisse Group AG advised Analog Devices on the transaction, and WilmerHale served as its legal adviser. Deutsche Bank AG was Hittite’s financial adviser, while Foley Hoag provided legal advice.