Wed, Sep 12, 2018 - Page 10 News List

Renesas to acquire US chipmaker IDT

EXPANSION:The Japanese automotive chip supplier is to pay US$49 a share, about a 16 percent premium to Integrated Device Technology’s closing price on Monday

Bloomberg

Renesas Electronics Corp chief executive Bunsei Kure attends a news conference in Tokyo yesterday.

Photo: Reuters

Renesas Electronics Corp, the second-biggest supplier of semiconductors used in cars, plans to acquire Integrated Device Technology Inc (IDT) for about US$6.7 billion to expand beyond the automotive sector into data centers and communications devices.

The Japanese company is to pay US$49 a share, it said in a statement, about a 16 percent premium to the US company’s Monday close.

That propelled Renesas’ stock as much as 7.8 percent higher in Tokyo, its biggest intraday jump in six months.

Renesas, which gets more than half of its sales from auto-sector clients, has signaled plans to make acquisitions beyond the industry to expand into fields from healthcare to aerospace. I

San Jose, California-based IDT gets most of its revenue from products for high-performance computing and consumer applications, including clock-timing, power management and radio-frequency devices.

“There’s little overlap between their product portfolios, so it’s a strategically sound move for Renesas,” Bloomberg Intelligence analyst Masahiro Wakasugi said. “But it does seem like the price is a little high.”

Morgan Stanley, Bank of America Merrill Lynch and Mizuho Securities acted as financial advisers to Renesas, while JPMorgan advised IDT.

Renesas can use cash on hand and bank loans to pay for the acquisition and has no plans for an equity fundraising, CEO Bunsei Kure told reporters in Tokyo.

The company plans to get regulatory approval and close the deal by the end of June next year.

“IDT has been focusing on products that have longer life spans, higher reliability and lower volatility,” Kure said. “Even though we operate in different areas, our core strategies are very similar.”

Renesas is second only to NXP Semiconductors NV in automotive market share.

Last year, the Japanese company paid US$3.2 billion for Intersil Corp, a US chipmaker whose product lineup includes semiconductors that manage battery voltage in hybrid and electric vehicles.

In June, chief financial officer Hidetoshi Shibata said Renesas’ next purchase would focus more squarely at cutting overlapping legal, administrative and information-systems expenses.

The acquisition of IDT would result in more than US$80 million of cost savings two years after the deal’s closing, Renesas said on Monday.

One of the biggest hurdles to major acquisitions is Renesas’ ability to absorb the target, Shibata said.

Renesas, which was formed in 2010 through the merger of NEC Corp’s chip unit and a money-losing venture between Hitachi Ltd and Mitsubishi Electric Corp, has about 20,000 workers. Intersil had little more than 1,000 employees and IDT has about 1,700.

IDT posted an adjusted net income of US$124 million on revenue of US$843 million for the year ended April 1.

Computing accounted for 40 percent of the company’s revenue in the latest quarter, while the communications and consumer segments contributed 29 percent and 20 percent respectively.

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