Chipmakers That Could Be Acquired

As chip giant Analog Devices (ADI) turns to M&A to better compete in the semi universe by agreeing to pay nearly $15 billion for Linear Technology (LLTC) , investors are looking at which other chipmakers could end up being acquired.

Analog Devices announced Tuesday afternoon that it has agreed to purchase Linear Technology for $14.8 billion, or $60 per share, in cash and stock. The combined entity will have about $5 billion in annual revenue and have an enterprise value of $30 billion.

Shares of Analog Devices were trading up around 1.4% Wednesday early afternoon to $63.78. Linear Tech was down 4% to $59.99, but the stock had shot up over 20% late Tuesday on the deal announcement.

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“Now this is an important deal,” said Jim Cramer, founder of TheStreet. “Why is it important? Because Analog, David Faber said, might have been in the sights ofTexas Instruments (TXN) , which had a monster quarter. This could have been a defensive deal. Linear is an industrial, Internet-of-things automobile play.”

The tie-up will combine two strong analog product portfolios and cultures, MKM Partners analyst Ian Ing wrote in a Wednesday note, adding that joining the Analog Devices umbrella may re-energize Linear Tech that has somewhat lacked growth.

“We see abundant opportunities for the companies to share the best practices, especially in how to sell successfully in high-volume consumer … and cost disciplines,” Ing noted.

He further explained that the purchase price represents a range of about 26 times to 28 times EPS and isn’t overly expensive especially given the $150 million in synergies the buyer is anticipating within 18 months of close.