Renesas Electronics Corp. of Japan has agreed to acquire Apple Inc. supplier Dialog Semiconductor Plc, the latest U.K.-based chipmaker being sold to Asian investors. Dialog accepted the all-cash offer of about 4.9 billion euros ($5.9 billion), at 67.50 euros per share, the companies said in statements Monday. Dialog shares rose as much as 18% in early trading in London on Monday. Renesas shares dropped as much as 6.9% in Tokyo.
The offer price is a 20% premium to Dialog’s Friday close of 56.12 euros. Shares of the company -- headquartered near London but listed in Frankfurt -- have risen around 25% since the start of the year, boosted by strong demand for Apple’s 5G handsets as well as takeover speculation.
The company had been working with advisers and was holding discussions with STMicroelectronics NV before the Franco-Italian company was outbid, Bloomberg News reported on Sunday. “We had multiple interested parties in the acquisition of Dialog,” Jalal Bagherli, chief executive officer of Dialog, said in a call with investors on Monday. Renesas was chosen for its culture, reputation, technology and market reach, he said.
Stephane Houri, analyst at Oddo, said he doesn’t expect to see a counteroffer though the bid may need to be sweetened. The 20% premium, while acceptable given historic levels, may not represent the full value.
The volume of deals involving semiconductor companies more than doubled last year to $144 billion, according to data compiled by Bloomberg. Nvidia Corp. agreed in September to buy SoftBank Group Corp.’s chip division Arm Ltd. for $40 billion, taking control of some of the most widely used chip technology in the industry’s largest-ever deal.
Arm, once the U.K.’s largest listed tech company, was sold to SoftBank in 2016, while chip designer Imagination Technologies Group Plc was sold to Chinese-backed investor Canyon Bridge Capital Partners in late 2017.
- Dialog shareholders to receive 67.50 euros per share in cash
- Offer represents premium of about 20% to Dialog Friday closing price
- Renesas to sell up to 270 billion yen in shares to repay Dialog debt
- Expected to close by the end of calendar year 2021Renesas plans to finance the transaction with bank loans of about 735.4 billion yen
Any deal could draw scrutiny from U.K. regulators as countries grow more protective of strategic industries such as semiconductors. Nvidia’s deal for Arm is set to be investigated by the country’s competition watchdog. The Competition and Markets Authority has said it will apply greater scrutiny to strategic tech deals, regardless of size. The U.K. government is also planning to introduce new rules that would allow officials to look at past takeovers and mergers where concerns have been raised.
Renesas, which had a market value of $20.5 billion as of Friday’s close, is one of the largest suppliers of semiconductors used in cars. It also has European offices in the U.K. and Germany. In 2019, Renesas completed its acquisition of U.S. firm Integrated Device Technology Inc., a deal valued at more than $6 billion that helped it expand beyond the automotive sector.
Dialog and Renesas have been working together for over a decade. The U.K. company, which specializes in designing power management chips, said in August that it would collaborate with Renesas on car computing platforms.
Both companies have found themselves part of tensions concerning the semiconductor supply chain. Apple has grappled with a shortage of vital chips that manage power consumption in iPhones and other devices, people with knowledge of the matter said in November. Within the auto industry, a semiconductor shortage is forcing carmakers to halt production lines and is straining their relationship with chip suppliers.
Like Dialog, Renesas is also a supplier to Apple. The U.S. tech giant was reported to be in talks to buy Renesas SP Drivers, 55% owned by Renesas, in 2014. The unit, which managed LCD displays, was later sold to Synaptics Inc. for $475 million.