Sun, Oct 14, 2012 - Page 13 News List

Consortium eyes Renesas buyout for US$2.5 billion


Renesas Electronics Corp, the world’s largest maker of microcontrollers, may be acquired for about ¥200 billion (US$2.5 billion) by a group led by Japan’s state-backed fund as early as next month, two people familiar with the matter said.

Innovation Network Corp of Japan may be joined by private companies, said the two people, who asked not to be identified because the discussions are private. The parties involved and the breakdown of investment are under negotiation, they said.

Renesas, whose customers include Apple Inc and Nintendo Co, forecast a ¥156 billion loss this fiscal year and recorded cumulative losses of ¥472 billion in the previous seven years, according to data. The company has cut staff to reduce costs by ¥54 billion annually and may close or sell factories to end losses exacerbated by falling demand for its system LSI chips.

State-run Innovation Network will ask Renesas to sell the LSI division in a further restructuring, a condition the chipmaker may reject as overly strict, one of the two people said.

The fund will inject ¥150 billion in return for two-thirds of Renesas’ shares, and a group of about 10 companies will invest about ¥50 billion in total, the Nikkei newspaper reported yesterday.

Toyota Motor Corp, Panasonic Corp, Nissan Motor Co and Denso Corp are among those involved, according to one of the people familiar with the talks. Calls for comment to the companies and Renesas outside business hours were not answered.

KKR & Co, a New York-based private-equity firm, earlier offered about ¥100 billion for control of Renesas to the chipmaker’s banks and three main shareholders NEC Corp, Hitachi Ltd and Mitsubishi Electric Corp, a person with knowledge of the matter said in August.

Renesas on Friday announced the sale of its Renesas High Components Inc subsidiary to Aoi Electronic Co. Financial terms of the deal were not disclosed in the statement. The company eliminated about 7,500 jobs, or about 17 percent of its workforce, through an early retirement program and has said as many as eight of 18 domestic factories may be closed or sold.

Renesas held a 27 percent share of the global microcontroller market last year, making it the world’s largest supplier of the devices used in automobiles and televisions.

It plans to raise that share to 35 percent in five years by targeting emerging markets and extending its alliance with Taiwan Semiconductor Manufacturing Co (台積電), a move that will help cut costs and widen profit margins, Renesas said in June.

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