Renesas to Buy Silicon Valley-Based Integrated Device Technology Inc for $6.7 billion
Japan's Renesas Electronics Corp said it had agreed to buy Silicon Valley-based Integrated Device Technology Inc (IDT) for $6.7 billion, its second major acquisition as it looks to develop semiconductors and sensors used for self-driving cars.
The boards of directors of both companies have unanimously approved the transaction. Closing of the transaction is expected to occur in the first half of 2019, following approvals by IDT shareholders and the relevant regulatory authorities.
Renesas will pay $49 per share in cash for IDT's outstanding shares, a 16 percent premium to their closing price on Monday.
The deal gives Renesas access to IDT's expertise in analog semiconductors for wireless networks and sensors, something that IDT was lacking. IDT makes low-power, high-performance semiconductors that can convert such things as sound and location into digital data.
As the automotive industry continues to develop autonomous and connected car technology, there will a huge demand for sensors and chips. IDT also produces a full product line of automotive sensors for safety systems, body, chassis, and powertrain.
Currently IDT generates just 11 percent of its revenue from automotive and industrial businesses.
Renesas commands 30 percent of the global market for the microcontrollers used in cars.
Renesas Electronics is the number one supplier of flash microcontrollers (MCU) worldwide and a premier supplier of advanced semiconductor solutions including microcontrollers and analog IC (integrated circuit) devices.
"We were weak in chips for wireless networks needed for the Internet of things and connected cars. We've been wanting to get such assets," Renesas Chief Executive Officer Bunsei Kure told a news conference.
Renesas alos struck a deal with Toyota last year. In October 2017, the company announced that its automotive technologies will drive Toyota's autonomous vehicles, which are currently under development and scheduled for commercial launch in 2020.
The deal between the two companies needs final approval from the Committee on Foreign Investment in the United States (CFIUS), which scrutinizes deals for potential national security issues, as well as from antitrust authorities in markets such as China.
Renesas said it was confident of obtaining the necessary approvals.
Renesas expects the deal to close in the first half of 2019, will finance the acquisition with 679 billion yen ($6.1 billion) of bank loans as well as cash, and expects to repay 200 billion yen every year.
The loan will be offered by the core banks of Mitsubishi UFJ Financial Group Inc and Mizuho Financial Group Inc, a source with direct knowledge of the matter told Reuters. The source was not authorized to be talk publicly on the matter and declined to be identified.
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