Apple supplier Dialog agrees to $6bn takeover by Renesas Electronics

Dialog had been in advanced discussions with suitors including Renesas, which is also an Apple supplier. The company was previously holding discussions with STMicroelectronics NV before the Franco-Italian company was outbid.

Renesas is making an all-cash offer of about 4.9 billion euros ($5.9 billion), at 67.50 euros per share. (Bloomberg)

Renesas Electronics Corp. of Japan has agreed to acquire Apple Inc. supplier Dialog Semiconductor Plc, the latest UK-based chipmaker being sold to Asian investors.

Renesas is making an all-cash offer of about 4.9 billion euros ($5.9 billion), at 67.50 euros per share, according to a statements made by the companies on Monday. Dialog has agreed to the terms of the transaction.

The offer price is a 20 percent premium to Dialog's Friday close of 56.12 euros. Shares of the Frankfurt-listed company have risen around 25 percent since the start of the year, boosted by strong demand for Apple's 5G handsets as well as takeover speculation.

Dialog shares rose 17 percent to 65.68 in early trading in London on Monday. Renesas shares dropped as much as 6.9 percent in Tokyo.

Dialog had been in advanced discussions with suitors including Renesas and working with advisers, Bloomberg News reported on Sunday. The company was previously holding discussions with STMicroelectronics NV before the Franco-Italian company was outbid, the people said at the time.

The volume of deals involving semiconductor companies more than doubled last year to $144 billion, according to data compiled by Bloomberg. Nvidia Corp. agreed in September to buy SoftBank Group Corp.'s chip division ARM Ltd. for $40 billion, taking control of some of the most widely used chip technology in the industry's largest-ever deal.

ARM, once the UK's largest listed tech company, was sold to SoftBank in 2016, while chip designer Imagination Technologies Group Plc was sold to Chinese-backed investor Canyon Bridge Capital Partners in late 2017.

Key Terms

• Dialog shareholders to receive 67.50 euros per share in cash
• Offer represents premium of about 20 percent to Dialog Friday closing price
• Renesas to sell up to 270 billion yen in shares to repay Dialog debt

Any deal could draw scrutiny from UK regulators as countries grow more protective of strategic industries such as semiconductors. Nvidia's deal for Arm is set to be investigated by the country's competition watchdog. The Competition and Markets Authority has said it will apply greater scrutiny to strategic tech deals, regardless of size.

The UK government is also planning to introduce new rules that would allow officials to look at past takeovers and mergers where concerns have been raised.

Renesas, which had a market value of $20.5 billion as of Friday's close, 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 its acquisition of US firm Integrated Device Technology Inc., a deal valued at more than $6 billion that helped it expand beyond the automotive sector.

Dialog and Renesas have been working together for over a decade. The UK company, which specializes in designing power management chips, said in August that it would collaborate with Renesas on car computing platforms.

Both companies have found themselves part of tensions concerning the semiconductor supply chain. Apple was grappling with a shortage of vital chips that manage power consumption in iPhones and other devices, people with knowledge of the matter said in November. Within the auto industry, a semiconductor shortage is forcing car makers to halt production lines and is straining their relationship with chip suppliers.

Like Dialog, Renesas is also a supplier to Apple. The US tech giant was reported to be in talks to buy Renesas SP Drivers, 55 percent owned by Renesas, in 2014. The unit, which managed LCD displays, was later sold to Synaptics Inc. for $475 million.