Shares of Exar Corp. (NYSE: EXAR), a designer of analog mixed-signal integrated circuits, surged on Wednesday after the company announced that it had agreed to be acquired by MaxLinear (NYSE: MXL). Exar stock was up 22% at noon, while MaxLinear stock had risen 3.4%.
MaxLinear has agreed to pay $13 in cash for each share of Exar, representing a 22% premium over the stock's closing price on March 28. Net of the cash on Exar's balance sheet, the deal is valued at $472 million. MaxLinear will fund the acquisition with cash from its balance sheet and a $425 million term loan.
Image source: Exar Corp.
MaxLinear CEO Kishore Seendripu expects the deal to drive earnings and free cash flow higher:
While MaxLinear didn't provide details on the exact effects the deal will have on earnings and free cash flow, the company does expect to achieve $15 million of annualized synergies within 12 months of closing.
Exar CEO Ryan Benton believes that the combination will benefit both its customers and employees: "MaxLinear's commitment to and its proven track record of providing its customers with innovative and differentiated high performance analog, mixed-signal and RF technology will present exciting new opportunities for our employees, customers and supply chain."
A tender offer will commence within the next 20 business days, with 20% of Exar shares already in support of the deal. The companies anticipate the deal to close during the second quarter of 2017.
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