Japan’s Renesas Electronics Corp negotiating to acquire Britain based Dialog Semiconductor

On Monday, Japan’s Renesas Electronics Corp stated, it is in talks to acquire British-based Dialog Semiconductor in a deal that is likely to bolster its automotive chip business and value it around $6 billion.

Under the terms of the potential deal, Renesas would pay 67.50 euros a share for Frankfurt-listed Dialog, said Renesas in a release to the Tokyo Stock Exchange, confirming an earlier statement from Dialog.

“Our statement does not represent any intention to go through with an acquisition,” said Renesas, an Apple Inc supplier.

Britain’s financial regulations will mean that the Japanese chipmaker will have declare whether or not it will launch a bid by March 7.

The development comes in the wake of Renesas and Dialog deepening ties in August with an agreement to cooperate in automotive computing platforms as the Japanese firm looks to bolster its offerings amid growing demand for automotive chips.

Renesas has been looking for ways to increase its share of analog chips used to process signals from temperature, sound, and light.

In 2018, as part of that effort, Renesas agreed to acquire U.S. chip design firm Device Technology Inc for $6.7 billion.

A cash offer of 67.50 euros per share for Dialog would represent a 20% premium to its closing stock price on Friday at 56.12 euros, when it had a market capitalization of around $5.2 billion (4.3 billion euros).

“A further announcement will be made as and when appropriate. There can be no certainty that any firm offer will be made for the Company, nor as to the terms on which any firm offer might be made,” said Dialog in its statement.

Renesas Electronics is scheduled to release its earnings results for the three months ending December 31, 2020 with Automotive chips accounting for nearly 50% its revenue.

Its shares in Tokyo fell by more than 5% in early trading, on Monday.

Last month, Dialog gave an a strong fourth-quarter revenue forecast citing heightened demand for 5G phones and tablets.

($1 = 0.8304 euros)

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