Japan’s Renesas said it was in talks to buy UK-based Dialog Semiconductor to bolster its automotive chip business and valued the Apple supplier at around $ 6 billion (around Rs 44 million).
As part of the potential deal, Renesas would pay EUR 67.50 (approximately Rs. 5,900) a share for Dialog, which is listed on the Frankfurt Stock Exchange, it said in a notice to the Tokyo Stock Exchange that confirmed an earlier statement by Dialog.
“Our statement does not constitute an intention to make an acquisition,” said Renesas.
Due to UK financial regulations, the Japanese chipmaker has to declare whether or not they will submit an offer by March 7th.
The talks come after Renesas and Dialog deepened their ties with an agreement to collaborate on automotive computing platforms in August as the Japanese company plans to bolster its offerings amid growing demand for automotive chips.
A global shortage of semiconductors has forced some automakers to cut their production plans.
Renesas, which has a global market share of around 30 percent for microcontrollers in automobiles, has been looking for ways to increase its proportion of analog chips, which are used to process signals for things like sound, light, and temperature.
As part of this effort, Renesas agreed in 2018 to buy US chip design company Device Technology for $ 6.7 billion (approximately 48,800 billion rupees) after US chip maker Intersil in 2017 3, Bought $ 2 billion (around Rs.23,300).
A cash offer of EUR 67.50 (approx. Rs. 5,900) per share for Dialog would generate a premium of 20 percent compared to the closing price on Friday of EUR 56.12 (approx. Rs. 4,900) with a market capitalization of approx EUR mean (approximately Rs. 37,700 crores).
“A further announcement will be made if necessary. There can be no certainty that a firm offer will be made for the company or the conditions under which a firm offer could be made,” Dialog said in its statement.
The Japanese company will publish its results for the three months ended December 31 on Wednesday. Automotive chips make up around half of sales. Tokyo stocks fell more than 5 percent in early trading.
Last month’s dialogue gave a positive sales forecast for the fourth quarter due to strong demand for 5G phones and tablets.
© Thomson Reuters 2021
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