Another Multi-Billion Dollar Deal in the Chip Industry
The acquisition values Dialog’s business at €67.50 ($81.43) per share, the two companies said in a statement. The bid represents a 20% premium to Dialog’s Friday closing price of €56.12 per share ($67.70). Dialog’s stock is up around 25% year-to-date, driven by robust demand for Apple’s 5G handsets as well as business acquisition rumors.
Shares of Dialog climbed 16.3% on the news in London, while Renesas’s stock slipped nearly 7% on the Tokyo stock exchange.
“Dialog has a strong culture of innovation along with excellent customer relationships and serves fast growing areas including IoT, industrial and automotive. By bringing Dialog’s talented team and expertise into Renesas, together, we will accelerate innovation for customers and create sustainable value for our shareholders,” said Hidetoshi Shibata, president and CEO of Renesas.
Before Renesas, Geneva-based semiconductor company STMicroelectronics NV was interested in buying Dialog but was outbid in the end.
“For several years, we have successfully executed on a diversification strategy that positions Dialog for high-growth,” said Dr. Jalal Bagherli, CEO of Dialog. “We have built a strong foundation of high-performance analog and power efficient mixed-signal expertise, extended our product portfolio and applied our technologies into markets including 5G, wearables, automotive, smart home, connected medical and industrial IoT.”
However, analysts are skeptical about whether the current business offer will be enough to convince shareholders of Dialog. Oddo analyst Stephane Houri said he does not believe the British company will receive any more offers; however, he added that Japanese businesses might have to improve their bid as the 20% premium might not reflect the full value.
The partnership between Dialog and Renesas has lasted for more than ten years now. Last August, the semiconductors company said it plans to collaborate with Renesas to design car-computing platforms.
The shortage of semiconductor chips has challenged many tech companies, including Renesas, Dialog, and Apple. Semiconductors are essential for Apple as they manage the power consumption in iPhones and other popular Apple devices.
In addition to Dialog, Renesas is also Apple’s supplier. Back in 2014, Apple was reportedly interested in buying Renesas LCD manufacturing business, Renesas SP Drivers. However, the division was later sold to Synaptics for $475 million.
The Japanese tech business is also one of the biggest suppliers of semiconductors found in cars. In 2019, the chipmaker bought the US semiconductor company Integrated Device Technology in a deal worth more than $6 billion that allowed the company to expand beyond the automotive industry.
Japanese semiconductor company Renesas Electronics has agreed to acquire its UK-based rival Dialog Semiconductor for €4.9 billion ($5.9 billion).