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UPDATE 3-Renesas says in talks to buy chip designer Dialog for $6 billion

· 02/07/2021 10:17
UPDATE 3-Renesas says in talks to buy chip designer Dialog for $6 billion

Recasts and updates share prices

- Renesas Electronics Corp 6723.T said on Monday it is in talks to buy Anglo-German chip designer Dialog Semiconductor DLGS.DE for about $6 billion in cash, as the Japanese chipmaker looks to take advantage of the growing demand for automotive chips.

Renesas, one of the world's biggest auto chip makers, said it has proposed to pay 67.50 euros a share for the Apple Inc AAPL.O supplier, confirming an earlier statement from the Frankfurt-listed company.

The talks come after Renesas and Dialog deepened ties in August with an agreement to cooperate in automotive computing platforms, while a global shortage of semiconductors has forced some car makers to curtail production plans.nFWN2FG0WT

It also follows a series of acquisitions by Renesas in recent years, underpinned by its quest to increase its share of analog chips used to process signals for things such as sound, light and temperature

Renesas, which has around a 30% global market share for microcontrollers used in cars, agreed in 2018 to buy U.S. chip design firm Device Technology Inc for $6.7 billion following the $3.2 billion purchase of U.S. chipmaker Intersil in 2017.

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

Dialog specialises in power-management chips and low-energy Bluetooth products used in fitness trackers and cordless earphones.

Renesas said its statement "does not represent any intention to go through with an acquisition." British financial regulations mean the Japanese company must declare whether or not it will launch a bid by March 7.

Shares in Renesas fell as much as 6.9% on Monday before closing down 3.6%, lagging a 2.1% gain in the broader market .N225.

The Japanese company is due to release its earnings results for the three months ended Dec. 31 on Wednesday. Automotive chips account for around half its revenue.

Dialog, a design bureau that has no production facilities of its own, last month gave an upbeat fourth-quarter revenue forecast due to strong demand for 5G phones and tablets.

($1 = 0.8304 euros)

(Reporting by Paul Carrel, Tim Kelly and Makiko Yamazaki; Editing by Alexander Smith, Richard Pullin & Shri Navaratnam)

((paul.carrel@thomsonreuters.com;; +49 30 2888 5216; Reuters Messaging: Reuters Messaging: paul.carrel.thomsonreuters.com@reuters.net))