Maxim Integrated Products, Inc. ( MXIM ) has recently announced the pricing of senior unsecured notes aggregating $500 million. These bonds carry a coupon rate of 2.500% and are due to mature in 2018. The offering is expected to close on Nov 21, 2013, subject to customary closing conditions.
Maxim stated that the net proceeds would be used for general corporate purposes, acquisitions and share repurchases. Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co. LLC and Stifel, Nicolaus & Company, Incorporated will be acting as joint book-running managers for the offering.
Maxim is a leading manufacturer of analog integrated circuits. In the recently concluded first-quarter fiscal 2014, the company spent $74.0 million on cash dividends and used $154.0 million to repurchase its common stock.
At quarter-end, the company had cash and short-term investments balance of $1.03 billion, down $165.5 million or 13.8% during the quarter. The company had $501.0 million in long-term debt on its balance sheet. Currently, the company's debt-to-total capitalization ratio is 17.4%, which will increase after the issuance of these notes.
We believe that Maxim 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 growth.
Currently, Maxim has a Zacks Rank #3 (Hold). Other stocks that are performing well at current levels include TiVo Inc. ( TIVO ), Best Buy Inc. ( BBY ) and Protalix BioTherapeutics, Inc. ( PLX ). All these stocks carry a Zacks Rank #1 (Strong Buy).
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