Japan’s Renesas Electronics (6723.T) announced on Thursday its intention to acquire electronics design firm Altium (ALU.AX) for $5.9 billion in cash, positioning itself to offer digital device design solutions.
This move reflects Renesas’ strategic shift towards enhancing its capabilities in the automotive chip sector and expanding its offerings to customers.
The acquisition not only marks a significant step for Renesas but also underscores Japan’s efforts to strengthen its semiconductor industry’s competitiveness and fortify the supply chain against geopolitical disruptions.
Renesas, known for supplying chips to major automakers like Toyota (7203.T) and Nissan (7201.T), aims to broaden its service portfolio by incorporating Altium’s digital tools, catering to engineers and designers engaged in circuit board development.
CEO Hidetoshi Shibata highlighted the necessity for Renesas to evolve beyond its traditional role as a device manufacturer, expressing a vision for avoiding marginalization in a rapidly changing market landscape.
The deal values Altium at A$68.50 per share, representing a 34% premium over its previous closing price. Renesas intends to finance the acquisition through a combination of existing cash reserves and bank loans.
Altium, headquartered in the United States and listed in Australia, recorded sales of $263 million in the last fiscal year, boasting an impressive earnings margin of 36.5%.
Altium’s CEO, Aram Mirkazemi, expressed optimism about the acquisition, foreseeing accelerated execution of their strategic plans.
While the deal has received approval from both companies’ boards, it still awaits endorsement from Altium shareholders, Australian regulatory authorities, and the court.
Renesas anticipates the completion of the acquisition in the latter half of the year.
Following the announcement, Renesas’ share price experienced a temporary decline, whereas Altium’s shares surged by 28%, reflecting market uncertainties and investor sentiments.
Altium’s board endorsed the deal, considering it favourable to shareholders’ interests and in alignment with the company’s strategic direction.
The acquisition marks another significant development in Japan’s outbound M&A landscape, following a recent trend of Japanese companies seeking growth opportunities abroad to counter domestic challenges.
Renesas’ journey epitomizes the evolution and resilience of Japan’s semiconductor industry, from its formation through mergers to its current strategic acquisitions aimed at global expansion and technological advancement.