Maxim Integrated's Standalone Value Limits Downside Risk From The ADI Deal

 

Maxim Integrated (MXIM) investors are no doubt feeling a bit frustrated these days, as we’re now about a year and one month past the original announcement of the Analog Devices (ADI) acquisition of Maxim, and the deal still hasn’t received final regulatory clearance. As has been the case lately, it’s the Chinese government that’s holding up final approval, and there’s no real clarity now as to when that approval will come.

I think there’s value for Maxim shareholders in holding on to their Analog shares if and when the deal completes, but I also think Maxim would be fine on its own. Maxim’s recent performance has demonstrated that the company’s content growth opportunities in the growing auto and industrial markets are real, and while I do still believe that semiconductor stocks are overvalued on a sector-wide basis, I think Maxim shares would hold up given strong margins and leverage to growth markets.

Maxim shares currently trade at a roughly 8% discount to Analog Devices, but I see little chance of the Chinese government actually rejecting the deal. While that discount may not be large enough for investors who aren’t interested in owning Analog Devices, it could be an option to consider as a discounted way to own Analog Devices.

 

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Maxim Integrated's Standalone Value Limits Downside Risk From The ADI Deal