Renesas Acquires Intersil in a Landmark $3.2 Billion Deal
After weeks of speculation, Renesas has confirmed it’s buying Intersil for $3.2 billion. Both companies have a strong presence in the automotive sector.
Renesas, a leading Japanese electronics company, had recently lost its top spot as a semiconductor vendor in the automotive industry due to NXP’s acquisition of Freescale and Infineon’s purchase of International Rectifier. This acquisition is seen as a way for Renesas to regain its market position.
“Renesas is focusing heavily on automotive, industrial, infrastructure, and the rapidly growing IoT segments to expand globally and maintain its leadership,” said Bunsei Kure, president and CEO of Renesas Electronics. “Intersil’s wide range of analog and power devices, along with its strengths in the automotive and industrial sectors, align perfectly with Renesas’ initiatives.”
Renesas will buy Intersil for $22.50 per share in cash, valuing the deal at approximately $3.2 billion, or ¥320 billion. The deal has been unanimously approved by both companies’ boards and is expected to close in the first half of 2017, pending approval from Intersil shareholders and regulatory authorities.
“We believe this combination will create significant synergies and cross-selling opportunities, helping Renesas strengthen its position in the global semiconductor market and offer unique products to customers,” Kure added.
By merging Renesas’ microcontroller and system-on-chip products with Intersil’s power management and precision analog capabilities, Renesas aims to address opportunities in automotive, industrial, cloud computing, healthcare, and IoT markets. In 2015, 12% of Intersil’s sales were in the automotive sector, up from 7% in 2012. Meanwhile, half of Renesas’ products are sold in this market.
The merger is expected to expand Renesas’ product lines, especially in analog devices, with the market projected to grow by $3.9 billion by 2020.
“Intersil has developed key technologies over the years, focusing on areas where we uniquely solve customer challenges,” said Necip Sayiner, president and CEO of Intersil. “This new phase offers great potential as we combine our portfolios with Renesas and gain the scale needed for accelerated growth.”
Renesas expects that revenue growth, combined with cost efficiencies from the larger scale, will generate synergies of $170 million. The acquisition is anticipated to immediately boost both gross and operating margins and be beneficial to non-GAAP earnings per share and free cash flows post-closing.
BofA Merrill Lynch and Morgan Stanley served as financial advisors to Renesas; Morrison Foerster provided legal counsel, and McKinsey offered strategic advice. JP Morgan acted as the exclusive financial advisor to Intersil, with Jones Day and Covington & Burling as legal counsel, and Foros Group providing strategic advice.
