Analog Devices Acquires Linear Technology In $14.8 Billion Blockbuster Deal

Analog Devices has agreed to buy Linear Technology in a $14.8 billion deal that could boost the combined company’s prospects in the Internet of Things market.

The deal creates a $5 billion company that will have a more compelling position in the fast-growing Internet of Things arena. Analog Devices said the deal nearly doubles its total addressable market from $8 billion to $14 billion.

[Related: 8 Red-Hot Internet Of Things Startups That Landed Funding This Summer]

’This is a deal that was likely sparked by the drive of both of these companies to survive and become a bigger combined force in the Internet of Things market, especially in manufacturing and automotive,’ said Douglas Grosfield, founder and CEO of Five Nines IT Solutions, a pioneering Kitchener, Ontario-based strategic service provider that has attracted widespread attention. ’If companies like these don’t make a move they are in danger of becoming yesterday’s news in their respective markets.’

The torrid pace of acquisition in the technology market is making it tougher for strategic service providers like Five Nines IT Solutions to make bets on vendors, said Grosfield.

’All the M&A activity we are seeing like this muddy the waters for strategic service providers,’ he said. ’Traditional VARs had a smaller group of technology vendors and that was who you went to market with. As a nimble, next-generation strategic service provider, you have to be extremely strategic on who you get in bed with. As a strategic service provider, you have a much broader portfolio of vendors that you are relying on.’

Grosfield said it is imperative that Analog Devices executives detail the strategic vision for the deal. ’When a market is moving this fast, the pressure to move quickly and make a decision sometimes overrides common sense. We need to know what the technology road map is and how their vision fits in with us.’

Under the terms of the deal, Linear Technology shares are valued at $60 per share, a 24 percent premium to the closing price of Linear Technology shares Monday. Linear Technology shareholders will receive $46 per share in cash and 0.2321 shares of Analog Devices stock for each Linear Technology share.

The deal has been approved by the boards of directors of both companies and is expected to close by the end of the first half of 2017. Analog Devices said it expects to achieve $150 million of ’annualized run rate cost synergies’ within 18 months of the close of the deal.