Chipmaker Renesas To Buy Software Company Altium For $5.9 Billion

(CTN News) – A $5.9 billion all-cash deal was announced on Thursday by Japanese chipmaker Renesas Electronics for the acquisition of electronics design software company Altium. This is Renesas’ second acquisition in a month as it aims to streamline device design.

A$68.50 a share is a 34% premium to Altium’s Wednesday closing price, and the acquisition will be financed with bank loans and cash on hand.

Altium is a software program that allows designers to design circuit boards digitally. Renesas will speed up the design process for its customers through the deal, which makes chips for automakers.

According to Renesas CEO Hidetoshi Shibata, the company will remain marginalized as long as it remains a traditional device manufacturer.

Altium, which is headquartered in San Diego and listed in Australia, had sales of $263 million in the year ended June and a profit margin of 36.5% before interest, taxes, depreciation, and amortization.

It is expected that the move will allow the company to execute at a faster pace, according to CEO Aram Mirkazemi.

In addition to the approval of the boards of directors of both companies, the transaction will need to be approved by Altium shareholders, an Australian court, and regulators, Renesas stated.

The share price of Renesas dropped as much as 4.9% before paring losses to trade down 0.5% at 2,589 yen. During the last close, Altium shares had risen 9.4% this year to A$65.80, a 28% increase.

A Kabucom Securities chief strategist stated, “They do not seem to be overpaying.”. According to him, the fact that (market) players are not reacting positively also implies they are still unsure of how this transaction will affect the company’s long-term growth.

LSEG data published in late December indicated that Japanese outbound mergers and acquisitions totaled $56 billion in 2023, an increase of 71% compared to 2022. A total of $178 billion was spent on outbound activities in 2018.

According to Altium, its board recommended the deal in the absence of a superior offer and provided an independent expert concluded that the deal was in the best interests of shareholders.

This is an endorsement of Altium’s strategy and performance,” said Mirkazemi.

The software company Autodesk offered Altium a $3.9 billion takeover bid in 2021, which Altium rejected as being too low. A later termination of the negotiations took place by Autodesk.

Analyst Paul Mason at E&P Capital wrote in a client note that, given unanimous support from the board and the high premium over the prior close, he would expect the transaction to go through.

As part of its focus on gallium nitride chips, which are used in electric vehicles, Renesas announced in March that it would acquire California-based Transphorm for $339 million.

Renesas Technology was founded in 2010 through the merger of NEC’s chip division and Hitachi’s and Mitsubishi Electric’s chip operations.

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