Analog Devices Inc.
) has recently announced the pricing of senior unsecured notes
aggregating $500 million. These bonds carry a coupon rate of
2.875% and are due to mature in 2023. The offering is expected to
close on June 3, 2013, subject to customary closing conditions.
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Analog Devices stated that about $393 million of the transaction
proceeds would be used for the redemption of its previously
announced $375 million senior unsecured notes, carrying a coupon
rate of 5.00%, maturing on June 6, 2014. The remaining net
proceeds would be used for general corporate purposes, share
repurchases, acquisitions, dividend payments and capital
J.P. Morgan Securities LLC, Credit Suisse Securities (USA) LLC
and Merrill Lynch, Pierce, Fenner & Smith Incorporated will
be acting as joint book-running managers for the offering.
Analog Devices is a leading supplier of analog and DSP integrated
circuits. In the recently concluded second quarter, the company
spent $104.4 million on cash dividends and used $4.5 million to
repurchase its common stock.
At quarter-end, Analog had $757.9 million in long-term debt on
its balance sheet. During the quarter, the net debt position
moved up slightly. Currently, the company's debt-to-total
capitalization ratio is only 14.5%, which will increase after the
issuance of these notes.
We believe that Analog has a strong balance sheet, which will
help the company to capitalize on investment opportunities and
make strategic acquisitions, further improving its growth
prospects. We believe the senior notes offering will bring down
its cost of capital, thus strengthening the company's balance
sheet and supporting its future growth.
Currently, Analog has a Zacks Rank #3 (Hold). Other stocks that
have been performing well and are worth a look include
), all carrying a Zacks Rank #2 (Buy).