Japan’s Renesas Electronics Corp 6723.T said on Tuesday it will buy USA chipmaker Intersil Corp for $3.22 billion amid a wave of consolidation in the global semiconductor industry.
Advertisement
Renesas, created from the semiconductor units of several Japanese companies, was bailed out by a state fund and key clients after the Fukushima natural disaster five years ago, but has since been on a recovery path that has left it with a significant war chest.
Bunsei Kure, Renesas CEO, told reporters and analysts, “It was a competitive bid, and we settled at a price nearly at the maximum limit”. In a briefing with journalists, the CEO said that Renesas will combine products from both companies into packages that can be sold to customers, according to Reuters.
The semiconductor industry has experienced a wave of consolidation as chip makers and their suppliers look to build scale in response to slowing growth and rising costs.
It will fit with Renesas’ main target markets of automotive, industrial, cloud computing, healthcare, and the Internet of Things (IoT).
Intersil’s stock is up more than 54 percent this year-to-date. The existing product lineup of Intersil comprises semiconductors that manage battery voltage in electric and hybrid vehicles, and operate on-board cameras and displays.
The deal is expected to grow Renesas’ capabilities in a wide range of market segments, particularly in the automotive space, which has been an increasing focus for both Renesas and Intersil.
This price reflects a premium of 14% over Intersil’s closing stock price as of Monday. It aims to complete the deal by June 2017.
Renesas confirmed it was in talks with Intersil back in August (see Renesas in talks over Intersil acquisition ) although at the end of the month it was revealed that Maxim Integrated Products Inc. A Maxim spokeswoman declined to comment. The Tokyo-based company said it plans to pay for the purchase with cash on hand.
The acquisition will need to win approval from the Committee on Foreign Investment in the United States (CFIUS), which scrutinizes deals for potential national security issues.
Advertisement
Apart from chips for industrial, mobile and infrastructure applications, Intersil also has a growing aerospace business and chips with military applications.
