A look at Japanese chipmaker Renesas's US$5.9 billion Altium deal
On Thursday, Renesas said it's buying Altium for US$5.9 billion in cash.
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The backstory: Renesas, a Japanese semiconductor powerhouse, is known for making essential integrated circuits, particularly for cars. It started in 2010 when the chip divisions of NEC Electronics Corporation and Renesas Technology (a merger of Hitachi and Mitsubishi Electric) merged. On the other hand, Altium, a software company with roots in the US and Australia, is known for its electronic design software called Altium Designer. In 2021, Altium made headlines by rejecting a buyout from Autodesk, saying it was too low of an offer.
More recently: Lately, it seems like Japan has been making a lot more deals abroad. For example, last year, there was a big increase in outbound mergers and acquisitions in the country. December's data from LSEG showed a 71% jump in Japan's outbound deals in 2023, reaching US$56 billion.
Japanese companies like Nippon Steel and Sekisui House have been expanding abroad, possibly due to challenges at home, like the country's aging population. For instance, Nippon Steel sealed a deal in December to acquire US Steel for US$14.1 billion. Renesas is also joining in, with plans to buy a US-based power semiconductor company called Transphorm Technology for US$339 million later this year.
The development: On Thursday, Renesas said it's buying Altium for US$5.9 billion in cash. Renesas aims to use Altium's digital tools to improve its device manufacturing, with CEO Hidetoshi Shibata stressing the importance of innovation in this area. Both of their boards have approved the deal, but it still needs the green light from Altium's shareholders, an Australian court and regulators. If everything goes as planned, they expect to finalize the deal later this year. After the announcement, Renesas' stock dipped slightly, while Altium's shares surged.
Key comments:
"As long as we remain a traditional device manufacturer we will only be marginalized," said Renesas CEO Hidetoshi Shibata at a news conference.
"This is going to help us execute at a faster pace," said Altium CEO Aram Mirkazemi at a news conference.
"Given unanimous support from the board, as well as the large premium to prior close, we would expect the transaction to be supported and go through," said analyst Paul Mason at E&P Capital in a client note.
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