S&P Downgrades Analog Devices (ADI) to 'BBB' Amid Linear Tech Deal

S&P Global Ratings lowered its corporate credit rating to 'BBB' from 'A-' on U.S. semiconductor manufacturer Analog Devices Inc. (Nasdaq: ADI). The outlook is negative.

At the same time, we lowered our rating on ADI's senior unsecured notes to 'BBB' from 'A-'. The short-term rating is unchanged at 'A-2'.

"The rating action reflects the nearly $7.3 billion in incremental debt that ADI will incur to acquire Linear Technology Corp., which will lead to initial pro forma adjusted leverage near 4x at the close of the transaction," said S&P Global Ratings credit analyst Andrew Chang.

The negative outlook reflects the high initial leverage after the Linear acquisition and the potential integration and operation risk that could prevent the company from reducing leverage to less than the 3x area in the two years following the close of the transaction.

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