Analog Devices Buys Linear for $14.8B as Boston Tech Plays Dealmaker

A lot of California tech companies have gobbled up Boston-area firms over the years, often leaving local advocates lamenting the loss of yet another headquarters or anchor tech company.

On Tuesday it was the reverse.

Boston-based LogMeIn (NASDAQ: LOGM) announced plans to scoop up its rival GoTo business from Santa Clara, CA-based Citrix Systems (NASDAQ: CTXS) in a $1.8 billion merger that will create a combined company based in Boston and led by LogMeIn’s CEO.

And in an even larger deal, Norwood, MA-based semiconductor producer Analog Devices (NASDAQ: ADI) announced it will pay a whopping $14.8 billion in cash and stock to acquire Linear Technology (NASDAQ: LLTC), a competitor based in Milpitas, CA.

The deal is one of the largest purchases by a Massachusetts tech company in recent memory, and it will create a semiconductor heavyweight valued at $30 billion.

Analog Devices CEO Vincent Roche will lead the combined company. In touting the deal, Roche cited the two firms’ engineering prowess and complementary set of products that will help their customers in the industrial, automotive, and communications infrastructure industries to solve problems “at the intersection of the physical and digital worlds.”

The union also brings together two long-standing pillars of the semiconductor industry. Linear Technology started in 1981. Analog Devices has been around since 1965, and has only had three CEOs in its 51-year history.

So, why join forces now? As The New York Times pointed out, the semiconductor industry has faced higher costs and more competition in recent years, especially from Asian companies. That has spurred a consolidation binge in recent months. In March 2015, NXP Semiconductors and Freescale Semiconductor announced a $40 billion merger. Two months later, semiconductor firm Avago Technologies bought rival Broadcom for $37 billion. And this month, SoftBank acquired chip designer ARM for $32 billion.

Analog Devices’ acquisition of Linear Technology is expected to close in the first half of 2017. The boards of both companies have unanimously approved the deal, but it still needs the approval of Linear shareholders and regulators.

Analog Devices stock was trading around $63.73 per share Wednesday morning, up a little more than 1 percent from Tuesday’s closing price. Linear Technology was trading at $59.90, down about 4 percent from Tuesday’s close.

Jeff Engel is a senior editor at Xconomy. Email: jengel@xconomy.com Follow @JeffEngelXcon

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