Advanced semiconductor offerings vendor Renesas Electronics and Intersil Corp. announced Monday that they have signed a definitive agreement for Renesas to acquire Intersil for US$22.50 per share in cash, representing an aggregate equity value of approximately $3.2 billion (approximately 321.9 billion yen at an exchange rate of 100 yen to the dollar).
The acquisition creates a highly synergistic, complementary product portfolio of system solutions targeted at large opportunities in the automotive, industrial, and IoT markets; with complementary customers and geographic penetration expected to create immediate opportunities for revenue growth.
The deal brings together two industry leaders in their respective segments. Together, Renesas’ and Intersil’s deep expertise across a number of state-of-the-art technologies and end markets will enable the combined company to become a complete solution provider of embedded systems to customers.
The transaction has been unanimously approved by the boards of directors of both companies. Closing of the transaction is expected in the first half of 2017, following approval by Intersil shareholders and the relevant governmental authorities.
BofA Merrill Lynch and Morgan Stanley acted as financial advisers to Renesas; Morrison Foerster acted as Renesas’ legal counsel; McKinsey & Company provided strategic advice to Renesas. JP Morgan acted as exclusive financial adviser to Intersil; Jones Day and Covington & Burling acted as Intersil’s legal counsel; Foros Group provided strategic advice to Intersil.
By combining Renesas’ microcontroller (MCU) and system-on-chip (SoC) products and technologies and Intersil’s power management and precision analog capability, Renesas will be ideally positioned to address several market segments such as automotive, industrial, cloud computing, healthcare, and the Internet of Things (IoT).
Strong product synergy and complementary customer and regional exposure will enable a larger global footprint and increase Renesas’ ability to serve customer system requirements. The acquisition is also expected to expand Renesas’ product portfolio, particularly for analog devices, where the market is expected to increase by approximately $3.9 billion by 2020.
Renesas anticipates near- and long-term revenue expansion opportunities combined with the modest anticipated cost efficiencies associated with greater scale will eventually generate synergies of $170 million. The transaction is expected to immediately increase both gross and operating margins and be accretive to Renesas’ non-GAAP earnings per share and free cash flows after closing.
Renesas anticipates near- and long-term revenue expansion opportunities combined with the modest anticipated cost efficiencies associated with greater scale will eventually generate synergies of $170 million. The transaction is expected to immediately increase both gross and operating margins and be accretive to Renesas’ non-GAAP earnings per share and free cash flows after closing.
“Renesas is accelerating its focus of resources in automotive, industrial, infrastructure, and the rapidly growing IoT segments to aggressively grow its global business and maintain its position as a leading provider. Intersil’s extensive portfolio of analog and power devices as well as its strength in the automotive, industrial, and broad-based segments complement many of Renesas’ initiatives in these areas,” said Bunsei Kure, Representative Director, president and CEO of Renesas Electronics. “We believe that this compelling and complementary combination will bring significant synergies and cross selling opportunities as well as a system solution proposition which will pave the way for Renesas to strengthen its position as a leader in the global semiconductor market while delivering value to its customers with a unique product offering.”
“Intersil has been part of the industry’s evolution for many decades, carving out key niches and developing core technology that provides tangible benefits over competing solutions,” said Necip Sayiner, president and CEO of Intersil. “As we’ve embarked on the most recent transformation over the last three years, we have honed the company’s core capabilities and focused them on areas where we are uniquely positioned to solve customer system challenges.”
