Mergers & Acquisitions

Renesas Electronics Agrees to Buy IDT for $6.7B

The move is seen as a push by Japanese chipmaker Renesas into the self-driving automobile and "data economy" markets.
William SprouseSeptember 11, 2018
Renesas Electronics Agrees to Buy IDT for $6.7B

Renesas Electronics, the Japan-based semiconductor firm, has agreed to buy U.S. chip company Integrated Device Technology (IDT) for $49 per share, a 29.5% premium to IDT’s undisturbed share price.

The companies say the all-cash transaction would represent an equity value of about $6.7 billion.

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“This acquisition will bring us complementary, market-leading analog mixed-signal assets and an incredibly talented group of professionals to help us boost our embedded solution capabilities,” Renesas Chief Executive Officer Bunsei Kure stated.

The deal is seen as part a push by Renesas, one of the largest chip suppliers to the auto industry, into the business of self-driving cars. Renesas said the deal would also broaden its reach into the “data economy” space, which includes robotics, data centers, and other connected devices. In 2016, Renesas paid $3.2 billion to buy Intersil, which makes battery technology for hybrid and electric vehicles.

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

The companies said they expected the deal to close in the first half of 2019, subject to regulatory approvals.

Renesas announced it was exploring a deal with IDT in late August, sending shares of IDT up 16.2%. On Tuesday, IDT shares jumped 10.7%.

“Renesas is weak in telecommunications chips, so the combination isn’t bad,” Akira Minamikawa, principal analyst at IHS Markit, told Reuters. “But IDT doesn’t have many automotive clients. Bringing their chips up to the level needed for automotive standards will not be easy.”

In reaction to the deal, analysts suggested other semiconductor companies, like Lattice Semiconductor and Cypress Semiconductor, might be on the auction block.

Renesas Electronics was created through a merger of the chip units of Hitachi, Mitsubishi Electric, and NEC. In 2013 it had to be bailed out by a government-backed fund.

Photo: Renesas

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