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Japanese Chipmaker Renesas Announces Plans to Acquire Software Firm Altium for $5.9 billion

On Thursday, Renesas Electronics of Japan (6723.T) announced its acquisition of electronics design firm Altium (ALU.AX) for $5.9 billion in cash. This move reflects the automotive chipmaker’s strategic aim to provide digital device design services to its customers. With this acquisition, Renesas emerges as a key player in dealmaking and investment within Japan’s semiconductor industry, aligning with government initiatives to enhance competitiveness and bolster supply chain resilience against geopolitical uncertainties.

Renesas, a chip manufacturer serving automotive giants like Toyota (7203.T) and Nissan (7201.T), seeks to expand its offerings by acquiring Altium, a provider of digital tools for engineers and designers involved in circuit board development.

Renesas CEO Hidetoshi Shibata emphasized at a news conference, “As long as we remain a traditional device manufacturer, we will only be marginalized.”

The acquisition offer stands at A$68.50 per Altium share, representing a 34% premium over the stock’s closing price on Wednesday. Renesas intends to finance the purchase using available cash reserves and bank loans.

Altium, headquartered in the United States and listed on the Australian stock exchange, recorded sales of $263 million for the year ending in June, boasting an EBITDA margin of 36.5%.

“This is going to accelerate our execution,” stated Altium CEO Aram Mirkazemi during the news conference.

While the deal has received approval from both companies’ boards of directors, it is subject to approval from Altium shareholders, an Australian court, and regulatory bodies, according to Renesas. The company anticipates the deal to conclude in the latter half of the year.

Following the announcement, Renesas’ share price initially dropped by as much as 4.9% before recovering slightly to trade around 1.3% lower at 2,568 yen during the afternoon session. Meanwhile, Altium shares, which had seen a 9.4% increase earlier this year, surged by 28% to A$65.83 at the latest close.

“They don’t appear to be paying too much,” remarked chief strategist Tatsunori Kawai at au Kabucom Securities. “However, the lack of positive reaction from market participants also suggests lingering doubts about how this deal will contribute to the company’s long-term growth.”