Integrated Device Technology Inc (NASDAQ: IDTI) stock rose 10.65% on September 11th, 2018 (as of 7:52 PM GMT-4 ; Source: Google finance) after Japanese chipmaker Renesas has signed a definitive agreement to acquire IDTI in an all-cash deal valued at about 733 billion yen, or $6.7 billion. If the deal is approved by shareholders and antitrust authorities, Renesas would pay $49 a share, a 30% premium over IDT’s stock price as of Aug. 30, when the Japanese company initially said it was considering the acquisition. Renesas said it would finance the deal mainly through new bank lending worth ¥679 billion ($6 billion), and no new share offers are planned. Renesas was the second-largest semiconductor supplier to the automotive industry by revenue in 2017, with $3.5 billion, according to data from research firm IHS Markit . It followed No. 1 NXP Semiconductors NV of the Netherlands, at $4.4 billion. IDTI is known for making components that control radio frequency and wireless power charging.
Meanwhile, Global chip makers have lately been trying to stake out positions in next-generation vehicle technology. Last year, Intel Corp. bought Mobileye, an Israeli company known for chip-based camera systems that power automated-driving features, for about $15 billion. As per Renesas Chief Executive Bunsei Kure, adding IDT would strengthen his company’s presence as a supplier of system-on-a-chip products for vehicles equipped with advanced driver-assistance systems and autonomous-driving technology. The analysts generally welcomed the acquisition, saying there was good synergy between the product lineups of Renesas, IDT and Intersil Corp., which is a U.S. company that Renesas bought last year for about $3.2 billion.
Renesas expects to close the deal by next June. Many attempted deals in the industry have been blocked or delayed by Chinese antitrust authorities, including an acquisition of NXP by Qualcomm Inc., which the two companies dropped after their bid to achieve Chinese approval stalled. Morgan Stanley, BofA Merrill Lynch and Mizuho Securities acted as financial advisors to Renesas; Morrison & Foerster LLP, and Covington & Burling LLP and Nagashima Ohno & Tsunematsu acted as Renesas’ legal counsel. J.P. Morgan acted as exclusive financial advisor to IDT; Latham & Watkins LLP acted as IDT’s legal counsel.
In addition, IDT’s analog mixed-signal products for data sensing, storage and interconnect are key devices that support the growth of data economy. Acquisition of these products enables Renesas to extend its reach to fast-growing data economy-related applications including data center and communication infrastructure, and to strengthen its presence in the industrial and automotive segments.