Analog Devices Inc. agreed in a deal on Monday to buy Hittite Microwave for close to $2.45 billion.
Hittite will receive $78 in cash for each share, which is 29 percent more than the Chelmsford, Mass.-based company's closing price on June 6, according to Bloomberg.
Analog builds semiconductors that are used in wireless-phone systems. The company looks to use the deal to obtain chips that are used by the military and automakers, as well as to get involved in chips that are used to power functions of daily life. These functions include automatic emergency braking and blind-spot detection in cars.
"Hittite's product focus is highly complementary to our own," Vincent Roche, CEO of Analog, said in a conference call. "From a growth perspective, this transaction expands product offerings in our key end markets and allows us to address new opportunities."
The two companies are expected to close the deal towards the end of Analog's third quarter, Fox Business reported.
Analog's chips, which are used in a variety of electronic equipment, are able to translate pressure, sound and temperature into digital signals.
"Our combined capabilities will enable us to bring more complete solutions to our customers and address more of the industrial, communications infrastructure and automotive markets," Roche said.
The deal is this year's third purchase of a U.S. integrated circuits maker for over $1 billion, higher than RF Micro Device Inc.'s planned acquisition of TriQuint Semiconductor Inc. for close to $1.5 billion, Bloomberg reported.
Analog is based in Norwood, Mass., which is almsot 40 miles away from Chelmsford.
The company looks to fund the deal with cash on hand, as well as short-term financing, Fox Business reported. Analog's shares increased by 6 percent to $55.83 in recent trading, while Hittite's increased by 28.6 percent to $77.88.
Credit Suisse served as Analog's financial adviser for the deal, while Deutsche Bank served as Hittite's financial adviser.
