Japanese Chip Maker To Acquire U.S. Rival -- WSJ
September 14 2016 - 3:03AM
Dow Jones News
By Josh Beckerman and Takashi Mochizuki
Japanese chip maker Renesas Electronics Corp. said Tuesday it
has agreed to buy California-based Intersil Corp. for about $3.2
billion, a step aimed at beefing up its strength as an
automotive-related semiconductor provider.
Renesas will pay $22.50 a share for the U.S. chip maker, a
premium of about 43.9% to the company's Aug. 19 closing price, the
last trading day before the company said it was in talks with
Intersil. The deal is expected to be completed by the first half of
2017 after approval from Intersil shareholders and regulators.
Renesas executives said the premium was justified by the synergy
effects from the acquisition. The company said it planned to pay
for the acquisition in cash.
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.
Renesas has been focusing its resources on its automotive
business, where growth is expected because car makers are adding
technology that requires semiconductors such as autonomous-driving
features.
Renesas said its automotive and industrial businesses accounted
for 70% of its revenue in the most recent fiscal year, up from 55%
three years earlier. The combination with Intersil will help it
offer better products for in-vehicle entertainment, battery
management and safety systems, Renesas said in a presentation to
investors.
Innovation Network Corp. of Japan, a fund backed by the Japanese
government, owns a majority stake in Renesas. Other shareholders
include Toyota Motor Corp. and its suppliers. Renesas was formed
through a fusion of the chip-making units of NEC Corp., Mitsubishi
Electric Corp. and Hitachi Ltd.
Intersil, based in Milpitas, Calif., sells semiconductors for a
variety of applications that include cars, computers, consumer
electronics products and aerospace hardware. Intersil Chief
Executive Necip Sayiner, who was appointed in 2013 to lead a
turnaround effort, has tried to focus the business on chips used to
manage power. Intersil also has a major sideline making chips
designed to withstand radiation exposure, a feature needed in
aerospace gear.
Intersil shares closed at $19.76 on Monday and rose 7.3% to
$21.21 after hours, while Renesas's stock price ended up 2.2% on
Tuesday in Tokyo.
Write to Josh Beckerman at josh.beckerman@wsj.com and Takashi
Mochizuki at takashi.mochizuki@wsj.com
(END) Dow Jones Newswires
September 14, 2016 02:48 ET (06:48 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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