Renesas Electronics to Acquire Dialog Semiconductor for $5.9B

Japanese semiconductor manufacturer Renesas Electronics Corporation (TYO: 6723) has reached the deal to acquire UK-based and Frankfurt listed Dialog Semiconductor Plc (ETR: DLG) for 4.9 billion euros ($5.90 billion) in cash. As reported, the acquisition of Dialog Semi, one of Apple Inc (NASDAQ: AAPL) suppliers will position the firm as one of the latest chipmakers to be sold to Asian investors.

Per the shared press release, Renesas Electronics will be financing the deal based on an all-cash offer at 67.50 euros per share, according to statements made by the companies on Monday. The acquisition will help advance Renesas’ growth strategy while also helping to bolster Dialog Semiconductor’s innovations.

“The transaction we announced today represents our next important step in catapulting Renesas’ growth plan to achieve substantial strategic and financial benefits, following our previous acquisitions,” said Hidetoshi Shibata, President, and CEO of Renesas. “Dialog has a strong culture of innovation along with excellent customer relationships and serves fast growing areas including IoT, industrial and automotive. By bringing Dialog’s talented team and expertise into Renesas, together, we will accelerate innovation for customers and create sustainable value for our shareholders.”

Renesas said it will be paying EUR 67.50 per share in cash for all Dialog outstanding shares while the deal is expected to be accretive to Renesas’ non-GAAP gross margin, and EBITDA after closing and to close by the end of 2021.

The announcement has refueled investor’s sentiments over Dialog’s shares which are currently up by 16.29% to EUR 65.26 per share. The shares of Renesas are however down by 3.61% to 1,203 Japanese Yen.

Renesas Acquisition of Dialog to Boost Growth for Both Firms

In the tech world where merger and acquisition (M&A) activities are most active, the bet to acquire any firm is usually backed by the potential growth such firms can usher in. In the case of Renesas Electronics and Dialog Semiconductor, the latter will leverage the high cash liquidity of the former to boost its diversification strategy.

“For several years, we have successfully executed on a diversification strategy that positions Dialog for high-growth,” said Dr. Jalal Bagherli, CEO of Dialog. “The Dialog team is excited to join forces with Renesas. The combined company will be in an even stronger position to provide innovative products for these markets, building on Renesas’ extensive sales, distribution, and customer support capabilities.”

The deal in all will help to unlock further differentiation to Renesas system solution with advanced connectivity including Dialog’s BLE, WiFi, and audio SoCs amongst others.