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Renesas agrees to buy Dialog Semi for $9.5 billion in cash

Renesas Electronics and Dialog Semiconductor say they have agreed to buy the Japanese chip maker’s registered design office in Frankfurt for 4.9 billion euros ($9.5 billion) in cash.

Renesas, the world’s largest car chip maker, offered €67.5 per share, 20% above its closing price on Friday and 52% above its average price over the past three months.

Shares of Dialog, one of which is Apple’s most important client, rose 16% to €3.65 in Frankfurt, just below the deal price, while shares of Renesas traded 9.6% lower and closed 6.3% lower, lagging the 1.2% rise gained in the broader trading market.

The deal comes after Renesas and Dialog agreed last August to collaborate on auto computing platforms, at a time when acute shortages around the world of semiconductors have forced some automakers to cut production rates.

Renesas, which has a 30% share of the automotive microcontroller market, purchased US chip design company Integrated Device Technology in 2018 for $7.6 billion after buying US chip maker Intersil in 2017 for $2.3 billion.

Renesas said it will allocate about 270 billion yen ($6.2 billion) in new shares to help fund the current deal, and expects incremental growth in revenue from the deal of about $200 million over the next 4-5 years, while saving about $125 million in costs over three years, the company is expected to publish its earnings results for the three months ending on December 31 next Wednesday, knowing that car chip sales represent about half of its revenue.

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