Renesas to acquire Intersil for approximately $3.2bn

The acquisition combines two long-standing industry leaders in their respective segments. Together, Renesas’ and Intersil’s deep expertise across a number of state-of-the-art technologies and end markets will enable the combined company to become a complete solution provider of embedded systems to customers. By combining Renesas’ market-proven MCU and SoC products and technologies and Intersil’s leading power management and precision analogue capability, Renesas will be well positioned to address some of the most exciting opportunities in key areas such as automotive, industrial, cloud computing, healthcare and the IoT. Strong product synergy and complementary customer and regional exposure will enable a larger global footprint and increase Renesas to ability to serve customer system requirements. The acquisition is also expected to grow Renesas’ served product lines, particularly for analogue devices, where the market is expected to increase by approximately $3.9bn by 2020.

Renesas anticipates that near- and long-term revenue expansion opportunities combined with the modest anticipated cost efficiencies associated with greater scale will eventually generate synergies of $17m. The transaction is expected to immediately increase both gross and operating margins and be accretive to Renesas’ non-GAAP earnings per share and free cash flows after closing.

“Renesas is accelerating its focus of resources in automotive, industrial, infrastructure, and the rapidly growing IoT segments to aggressively grow its global business and maintain its position as a leading provider. Intersil’s extensive portfolio of analogue and power devices as well as its strength in the automotive, industrial, and broad-based segments complement many of Renesas’ initiatives in these areas,” said Bunsei Kure, Representative Director, President and CEO, Renesas Electronics. “We believe that this compelling and complementary combination will bring significant synergies and cross selling opportunities as well as system solution proposition which will pave the way for Renesas to strengthen its position as a leader in the global semiconductor market while delivering value to its customers with a unique product offering.”

“Intersil has been part of the industry’s evolution for many decades, carving out key niches and developing core technology that provides tangible benefits over competing solutions,” said Necip Sayiner, President, CEO and Director, Intersil. “As we’ve embarked on the most recent transformation over the last three years, we have honed the company’s core capabilities and focused them on areas where we are uniquely positioned to solve customer system challenges. The success of that strategy and the ability to improve the quality of the business is what has brought us to this next and exciting phase. We see great potential in combining the Intersil and Renesas portfolios and gaining the scale that will provide a platform for accelerated growth.”

BofA Merrill Lynch and Morgan Stanley acted as financial advisers to Renesas; Morrison Foerster acted as Renesas’ legal counsel; McKinsey & Company provided strategic advice to Renesas. J.P. Morgan acted as exclusive financial adviser to Intersil; Jones Day and Covington & Burling acted as Intersil’s legal counsel; Foros Group provided strategic advice to Intersil.