Renesas Considering Buying Idt And Will Become The Largest M&a Case In Japan's Semiconductor Industry

According to the Nikkei News, according to a person familiar with the matter (August 31), Japanese semiconductor giant Renesas Electronics has final negotiations with US chip maker IDT (Integrated Device Technology), and Renesas plans to acquire IDT. By including IDT as a wholly-owned subsidiary, the estimated acquisition amount will reach US$6 billion (about 660 billion yen), which will become the largest M&A case in the history of the Japanese semiconductor industry.

IDT is listed on NASDAQ in the United States, and Renesas has completed the acquisition and expects IDT to go down the market.

The report pointed out that Renesas wants to acquire IDT, mainly to strengthen the autonomous driving technology. It is expected that the acquisition of IDT will enable Renesas to obtain the chip design/development capability required for autonomous driving. IDT is a fabless chip design company with high R&D capabilities in the design of communication chips. In fiscal 2017 (for the fiscal year ending March 2018), revenue was $842.76 million. It earned US$11.91 million and acquired German automotive semiconductor company ZMDI in 2015.

For the above-mentioned contents of the Nikkei News, Renesas Electronics officially responded with a press release on August 31:

Probably, the content reported by the Nikkei News is not announced by Renesas, but Renesas has not yet made any decision in order to allow the business to grow further and indeed consider acquiring IDT. At the time of the company's acquisition, Renesas carefully selected and considered various factors, including: (1) product/market compatibility and complementarity; (2) market competitiveness and financial soundness of candidate companies; (3) post-merger integration The feasibility of (PMI) is to maximize the business and shareholder value generated by the combined company.

In particular, the acquisition target should be competitive in Renesas' key business areas and complement Renesas' core products, including microcontrollers (MCUs) and system-on-a-chip (SoCs), to achieve long-term synergy. In addition, the target will strengthen the financial status of the Renesas Group (improvement in gross margin and shareholder value) immediately after the acquisition. Another decisive factor is the compatibility and versatility of management policies and business operations, which makes unified business management after the merger of the combined company possible.

The battle between the top two auto electronics manufacturers

Renesas is the world's second-largest automotive chip factory. According to IHS Markit, Renesas' revenue in 2017 was US$3.53 billion, second only to NXP Semiconductors NV's US$4.42 billion. 2nd.

The global semiconductor industry is working together. NXP Semiconductors acquired approximately 2 trillion yen in 2015 to acquire Freescale Semiconductor, and Renesas also acquired Intersil in approximately 325 billion yen in 2017.

According to Renesas's submission to the government, Renesas intends to use cash and bank loans to complete the transaction. As of the end of June this year, Renesas held 130 billion yen (about 1.2 billion US dollars) in cash.

Thanks to the news that Renesas may offer a huge amount of gold, the IDT share price surged to a record high in 17 years. IDT surged 12.29% on August 31, closing at $42.49, a record high in the past 17 years (since May 25, 2001). Based on the closing price on August 31, IDT's market value reached US$5.496 billion (approximately 610 billion yen).