Renesas Electronics, a major auto embedded chipmaker based in Tokyo, will buy Dialog Semiconductor for 4.9 billion euros, equal to about $5.9 billion in cash, the companies announced Monday.
Dialog’s shares climbed nearly 15% on rumors of the deal over the past three days.
Dialog, based in Frankfurt, has served as an Apple chip supplier, and called the deal a “compelling opportunity” for its shareholders in a statement. The two companies offer generally complementary product lines.
The acquisition has been approved by the boards of both companies and should be complete in the second half of 2021. It is subject to antitrust and foreign investment clearances from Germany, China, Taiwan and the U.S.
The purchase continues a trend of consolidations among semiconductor companies in recent months and years. AMD is currently in the process of buying Xilinx for $35 billion and Nvidia is buying Arm for $40 billion.
RELATED: AMD to buy Xilinx for $35 billion in stock
Nvidia will buy Arm from SoftBank for $40 billion
Renesas gains access to Dialog designs for integrated circuits for providing power to mobile devices and IoT. Dialog makes technologies for battery and power management, AC/DC power conversion, non-volatile flash memory, Bluetooth Low Energy and low-power Wi-Fi.
Dialog’s mix of products combined with Renesas’ embedded computer, analog and power products “creates even greater growth opportunities in today’s increasingly connected world, “said Dialog CEO Jalal Bagherli in a statement.
Renesas CEO Hidetoshi Shibata said the transaction represents “our next important step in catapulting Renesas’ growth plan.”
Renesas bought Intersil Corporation in 2017 and Integrated Device Technology in 2019 to expand its analog products and strengthen its combinations of MCUs, SoCs and analog products.
Renesas expects to add engineering and design scale in low-power and mixed signal products with the Dialog’s capabilities, the company said. Renesas has about 20,000 employees and Dialog has about 2,000 workers globally.
The Japanese company was incorporated in 2002 as consolidation of the semiconductor units of Hitachi and Mitsubishi. Renesas is a contraction of “Renaissance Semiconductor for Advanced Solutions.” Renesas is a leader in auto semiconductors and along with NXP, Infineon, STMicroelectronics, On Semiconductor and Texas Instruments control about half of the global market.
Annually, Renesas expects $200 million in incremental revenue growth with the Dialog purchase from cross-selling of products and $125 million in cost savings.
Dialog’s share price closed at $78.25 Monday, its highest over the last year and 15% above the price on Friday. Renesas closed Monday at $5.72, below its six-month high of $6.55 on Jan. 22.