Renesas said on Thursday it will pay A$68.50 a share for Altium in a 34% premium to its Wednesday closing price, with the purchase financed with bank loans and cash on hand.
Altium offers digital tools for designing circuit boards. Through the deal Renesas, which makes chips for automakers, intends to speed up the process of electronics design for customers.
“So long as we are remain a traditional device manufacturer we will only be marginalised,’ Renesas CEO Hidetoshi Shibata told a news conference.
Headquartered in San Diego and listed in Australia, Altium booked sales of $263 million in the year ended June with an earnings before interest, taxes, depreciation and amortisation margin of 36.5%
“This is going to help us execute at a faster pace,” said Altium CEO Aram Mirkazemi.
The deal, which has been approved by the boards of directors of both companies, will require approval from Altium shareholders, an Australian court and regulators, Renesas said.
Renesas’ share price fell as much as 4.9% before paring losses to trade down 0.5% at 2,589 yen. Altium shares, which had risen 9.4% this year at the last close, jumped 28% to A$65.80.
“They don’t seem to be overpaying,” said Tatsunori Kawai, chief strategist at au Kabucom Securities.
“But the fact (market) players are not reacting positively also means they are still unconvinced about how this deal would contribute to the company’s long-term growth,” he added.
Japanese outbound mergers-and-acquisitions totalled $56 billion in 2023, up 71% from 2022, showed LSEG data in late December. Outbound activity peaked in 2018 at $178 billion.
Altium said its board recommended the deal in the absence of a superior offer and subject to an independent expert concluding it was in the best interests of shareholders.
“It’s a strong endorsement of Altium’s strategy and its performance,” said Mirkazemi.
“Given unanimous support from the board, as well as the large premium to prior close, we would expect the transaction to be supported and go through,” analyst Paul Mason at E&P Capital wrote in a client note.
The acquisition is the latest by Renesas, which last month said it would buy California-based power semiconductor company Transphorm for $339 million as it focuses on gallium nitride chips that are used in electric vehicles.
($1 = 1.5406 Australian dollars)
Reporting by Kantaro Komiya and Sam Nussey; Additional reporting by Mariko Katsumura and Archishma Iyer; Editing by Jamie Freed and Christopher Cushing
Kantaro writes about everything from Japan’s economic indicators to North Korea’s missiles to global regulation on AI companies. His previous stories have been published in the Associated Press, Bloomberg, the Japan Times and Rest of World. A Tokyo native, Kantaro graduated from DePauw University in the United States and was the recipient of the Overseas Press Club Foundation 2020 Scholar Award.