In the latest merger of semiconductor companies, Renesas Electronics Corporation and Intersil Corporation announced they have signed a definitive agreement for Renesas to acquire Intersil for US$22.50 per share in cash, representing an aggregate equity value of approximately US$3.2 billion (approximately 321.9 billion yen at an exchange rate of 100 yen to the dollar). The transaction has been unanimously approved by the boards of directors of both companies. Closing of the transaction is expected in the first half of 2017, following approval by Intersil shareholders and the relevant governmental authorities.
The acquisition combines two long-standing industry leaders in their respective segments. Together, Renesas' and Intersil's deep expertise across a number of state-of-the-art technologies and end markets will enable the combined company to become a complete solution provider of embedded systems to customers. By combining Renesas' market-proven microcontroller (MCU) and system-on-chip (SoC) products and technologies and Intersil's leading power management and precision analog capability, Renesas will be well positioned to address some of the most exciting opportunities in key areas such as automotive, industrial, cloud computing, healthcare, and the Internet of Things (IoT). Strong product synergy and complementary customer and regional exposure will enable a larger global footprint and increase Renesas to ability to serve customer system requirements. The acquisition is also expected to expand Renesas' product portfolio, particularly for analog devices, where the market is expected to increase by approximately US$3.9 billion by 2020.
Renesas anticipates near- and long-term revenue expansion opportunities combined with the modest anticipated cost efficiencies associated with greater scale will eventually generate synergies of US$170 million. The transaction is expected to immediately increase both gross and operating margins and be accretive to Renesas' non-GAAP earnings per share and free cash flows after closing.
"Intersil has been part of the industry's evolution for many decades, carving out key niches and developing core technology that provides tangible benefits over competing solutions," said Necip Sayiner, President, CEO and Director of Intersil Corporation. "As we've embarked on the most recent transformation over the last three years, we have honed the company's core capabilities and focused them on areas where we are uniquely positioned to solve customer system challenges. The success of that strategy and the ability to improve the quality of the business is what has brought us to this next and exciting phase. We see great potential in combining the Intersil and Renesas portfolios and gaining the scale that will provide a platform for accelerated growth."