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Renesas announces $6.7bn takeover of US chipmaker IDT

Company once on brink of bankruptcy looks to beef up automotive chip business

Renesas Electronics CEO Bunsei Kure speaks at a news conference in Tokyo on Sept.11. (Photo by Toshiki Sasazu)

TOKYO -- Japanese semiconductor maker Renesas Electronics on Tuesday announced the purchase of Integrated Device Technology of the U.S. in a deal worth more than $6.7 billion (733 billion yen).

Renesas will pay $49 a share to acquire all outstanding IDT shares, a premium of more than 29% versus IDT's closing price on Aug. 30.

Renesas plans to finance the purchase with 679 billion yen in bank loans. It will not issue additional shares to pay for the transaction, the company said.

"While Renesas has strength in automotive and industrial products as a top manufacturer, IDT has significant technology related to wireless and sensors," Renesas President and CEO Bunsei Kure said at a news conference the same day.

"There will be a complementary relationship. We can cultivate emerging markets, such as data centers, self-driving cars and the internet of things. This merger is an appropriate measure for becoming a world champion," Kure said.

To complete the deal, the two companies must have the approval of antitrust authorities in major international markets. Addressing concerns that Chinese regulators may block the buyout, Renesas Chief Financial Officer Hidetoshi Shibata said: "IDT's sales in China account for only 10% of its revenue. The figure for Renesas is 20%. The business fields of the two companies don't overlap so much. Considering the [market] shares of our products, it won't be a problem."

The acquisition marks a dramatic turnaround for the Japanese company, which was on the verge of bankruptcy as recently as 2011, when one of its key factories was destroyed in a massive earthquake. The company had to be bailed out by a government-backed fund and customers including Toyota Motor. With its finances now healthy, Renesas is going back on the offensive.

IDT trades on the Nasdaq and had an operating income of $110.91 million for the 12 months ended April 1. The California-based company is known for its communication chips used by data centers and telecom operators. It bought a German chip company focused on automotive products in 2015.

Renesas is the world's second-largest producer of automotive chips. It hopes to apply IDT's know-how in self-driving systems, which require the transmission of large amounts of data at high speed.

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