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By Lehar Maan and Soham Chatterjee
June 9 Analog Devices Inc said it would
buy Hittite Microwave Corp in a deal valued at $2
billion to strengthen its radio frequency (RF) and signal
conversion chip offerings.
Analog, which makes chips that help translate pressure,
temperature and sound into digital signal, said the acquisition
would boost its growth in the industrial, communication gear and
"(The deal) really builds out the core competency (Analog)
will have in very high frequency RF and microwave used in
high-end base stations, microwave backhaul equipment and
satellite equipment," Stifel Nicolaus & Co analyst Tore Svanberg
Hittite has a stronger growth profile than Analog, Svanberg
Analog will pay $78 per share in cash, which represents a
premium of about 29 percent to Hittite's Friday close of $60.56
Stephens Inc analyst Harsh Kumar said the deal value was
high as Hittite's stock already trades at a premium and the
company's growth could be hurt by competition down the line.
Hittite had cash and short-term investments of $492.4
million and no debt as of March 31, according to Thomson Reuters
data, giving the deal an equity value of $2.45 billion.
Analog said it expected the deal to boost its adjusted
profit by about 4-6 percent in the fourth quarter ending
"In the fourth quarter, our combined gross and operating
margins should improve slightly due to Hittite's higher margin
profile," Analog Chief Financial Officer David Zinsner said on a
Analog said it expected to fund the acquisition through cash
on hand and short-term debt.
The transaction is expected to close by the end of the third
Credit Suisse was Analog's financial adviser for the deal,
while Deutsche Bank advised Hittite.
Norwood, Massachusetts-based Analog also reaffirmed its
revenue and adjusted profit forecast for the third quarter
The company forecast an adjusted profit of 60-64 cents per
Analog said it expected revenue to rise by 1-5 percent from
the second quarter, which translates into $701.4 million-$729.2
Analysts on average were expecting a profit of 63 cents per
share on revenue of $716.09 million, according to Thomson
Hittite's shares were up 28.7 percent at $77.95 in afternoon
trading on the Nasdaq on Monday. Analog's shares were up about
5.5 percent at $55.59.
(Editing by Kirti Pandey)