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September 14, 2016

Renesas makes big auto play with $3.2 billion Intersil acquisition

The transaction, which is expected to be completed by the first half of 2017, will be financed with cash-on-hand.

By CBR Staff Writer

Japanese semiconductor manufacturer Renesas Electronics has agreed to acquire US chip maker Intersil for around $3.2bn as the company accelerates its focus of resources in automotive, industrial, infrastructure, and the Internet of Things (IoT) segments.

Renesas will pay $22.50 a share for Intersil. The transaction is expected to be completed by the first half of 2017 after approval from Intersil shareholders and regulators.

Intersil was established in August 1999 through the acquisition of the semiconductor business of Harris Corporation.

The company provides power management and precision analog solutions for applications in the computing, consumer, industrial and hi-rel markets.

The latest acquisition brings together Intersil’s power management and precision analogue capability and Renesas’ microcontroller and system-on-chip products as well as technologies.

It creates a complementary product portfolio of system solutions targeted at large opportunities in the automotive, industrial, and IoT markets.

Renesas expects the acquisition to generate synergies of $170m and immediately increase both gross and operating margins and be accretive to its non-GAAP earnings per share and free cash flows post completion.

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Renesas Electronics representative director, president and CEO Bunsei Kure said:  “We believe that this compelling and complementary combination will bring significant synergies and cross selling opportunities as well as system solution proposition which will pave the way for Renesas to strengthen its position as a leader in the global semiconductor market while delivering value to its customers with a unique product offering.”

Renesas said its automotive and industrial businesses accounted for 70% of its revenue in the last fiscal year, up from 55% three years earlier.

In a presentation to investors, Renesas said the combination with Intersil will help it offer better solutions for in-vehicle infotainment, battery management, camera network, and display network.

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