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.
Photo: Reuters
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.
NOT JUSTIFIED: The bank’s governor said there would only be a rate cut if inflation falls below 1.5% and economic conditions deteriorate, which have not been detected The central bank yesterday kept its key interest rates unchanged for a fifth consecutive quarter, aligning with market expectations, while slightly lowering its inflation outlook amid signs of cooling price pressures. The move came after the US Federal Reserve held rates steady overnight, despite pressure from US President Donald Trump to cut borrowing costs. Central bank board members unanimously voted to maintain the discount rate at 2 percent, the secured loan rate at 2.375 percent and the overnight lending rate at 4.25 percent. “We consider the policy decision appropriate, although it suggests tightening leaning after factoring in slackening inflation and stable GDP growth,”
DIVIDED VIEWS: Although the Fed agreed on holding rates steady, some officials see no rate cuts for this year, while 10 policymakers foresee two or more cuts There are a lot of unknowns about the outlook for the economy and interest rates, but US Federal Reserve Chair Jerome Powell signaled at least one thing seems certain: Higher prices are coming. Fed policymakers voted unanimously to hold interest rates steady at a range of 4.25 percent to 4.50 percent for a fourth straight meeting on Wednesday, as they await clarity on whether tariffs would leave a one-time or more lasting mark on inflation. Powell said it is still unclear how much of the bill would fall on the shoulders of consumers, but he expects to learn more about tariffs
Greek tourism student Katerina quit within a month of starting work at a five-star hotel in Halkidiki, one of the country’s top destinations, because she said conditions were so dire. Beyond the bad pay, the 22-year-old said that her working and living conditions were “miserable and unacceptable.” Millions holiday in Greece every year, but its vital tourism industry is finding it harder and harder to recruit Greeks to look after them. “I was asked to work in any department of the hotel where there was a need, from service to cleaning,” said Katerina, a tourism and marketing student, who would
i Gasoline and diesel prices at fuel stations are this week to rise NT$0.1 per liter, as tensions in the Middle East pushed crude oil prices higher last week, CPC Corp, Taiwan (台灣中油) and Formosa Petrochemical Corp (台塑石化) said yesterday. International crude oil prices last week rose for the third consecutive week due to an escalating conflict between Israel and Iran, as the market is concerned that the situation in the Middle East might affect crude oil supply, CPC and Formosa said in separate statements. Front-month Brent crude oil futures — the international oil benchmark — rose 3.75 percent to settle at US$77.01
RSS