(Bloomberg) – Japan’s Renesas Electronics Corp. said it is in talks to acquire Dialog Semiconductor Plc, the UK chip designer whose customers include Apple Inc.
Renesas is making a cash offer of 67.50 euros per share, according to a statement on Monday. He stated that no final decision has been made and there is no guarantee that he will continue the acquisition. The Japanese company would pay about 4.9 billion euros ($ 5.9 billion) to assume its goal, Bloomberg News reported on Sunday.
The offer price is a premium of 20% compared to the closing of Dialog on Friday of 56.12 euros. Shares in the Frankfurt-listed company have risen about 25% since the beginning of the year, driven by strong demand for Apple’s 5G handsets, as well as speculation about acquisition.
Renesas shares fell up to 6.9% in Tokyo.
Dialog was in advanced discussions with suitors, including Renesas, and working with consultants, people familiar with the matter said on Sunday. The company was already in negotiations with STMicroelectronics NV before the Franco-Italian company was overtaken, people said at the time.
Turnover involving semiconductor companies more than doubled last year to $ 144 billion, according to data compiled by Bloomberg. Nvidia Corp. agreed in September to buy the Arm Ltd. chip division from SoftBank Group Corp. for $ 40 billion, taking control of some of the most widely used chip technologies in the industry’s biggest business of all time.
Any deal could attract scrutiny from UK regulators as countries become more protective of strategic sectors, such as semiconductors. Nvidia’s deal for Arm is set to be investigated by the country’s competition watchdog. The Competition and Markets Authority said it would apply greater scrutiny to strategic technology businesses, regardless of size.
The UK government is also planning to introduce new rules that would allow authorities to examine previous acquisitions and mergers, where concerns have been raised.
Renesas, which had a market cap of $ 20.5 billion at the close of Friday, is one of the largest suppliers of semiconductors used in cars. It also has European offices in the UK and Germany. In 2019, Renesas completed the acquisition of the American company Integrated Device Technology Inc., a business valued at more than $ 6 billion that helped to expand beyond the automotive sector.
Dialog and Renesas have worked together for more than a decade. The British company, which specializes in designing power management chips, said in August that it would collaborate with Renesas on automotive computing platforms.
Both companies found themselves part of tensions related to the semiconductor supply chain. Apple was battling the dearth of vital chips that manage power consumption in iPhones and other devices, people with knowledge of the matter said in November. In the auto industry, the scarcity of semiconductors is forcing car manufacturers to shut down production lines and damaging their relationship with chip suppliers.
Like Dialog, Renesas is also a supplier to Apple. The US technology giant was in talks to buy Renesas SP Drivers, 55% owned by Renesas, in 2014. The unit, which managed LCD monitors, was later sold to Synaptics Inc. for $ 475 million.
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