Japanese chipmaker Renesas Electronics on Thursday said it has agreed to buy Australian-listed electronics design firm Altium for A$9.1 billion (S$7.96 billion) in an all-cash deal.
Renesas will pay A$68.50 a share, a 34 percent premium to Altium's Wednesday closing price, and will finance the purchase with bank loans and cash on hand.
Altium offers tools for designing circuit boards. Through the deal, Renesas intends to streamline the process of electronics design for customers.
"There is a greater pressure to shorten the time to market," Renesas CEO Hidetoshi Shibata told a news conference.
Headquartered in California and listed in Australia, Altium booked sales of US$263 million (S$354.46 million) in the year ended June with earnings before interest, taxes, depreciation and amortisation margin of 36.5 percent.
The deal, which has been approved by the boards of directors of both companies, will require approval from Altium shareholders, an Australian court and regulators, Renesas said.
Renesas' share price fell as much as 4.9 percent before paring losses to trade down 0.5 percent at 2,589 yen (S$23.23). Altium shares, which had risen 9.4 percednt this year at the last close, jumped 28 percent to A$65.80.
"They don't seem to be overpaying," said Tatsunori Kawai, chief strategist at au Kabucom Securities.
"But the fact (market) players are not reacting positively also means they are still unconvinced about how this deal would contribute to the company's long-term growth," he added.
Altium said its board recommended the deal in the absence of a superior offer and subject to an independent expert concluding it was in the best interests of shareholders.
"Given unanimous support from the board, as well as the large premium to prior close, we would expect the transaction to be supported and go through," analyst Paul Mason at E&P Capital wrote in a client note.
In 2021 Altium rejected a US$3.9 billion takeover bid from software company Autodesk as too low. Autodesk later ended talks.
"This is going to help us execute faster," said Altium CEO Aram Mirkazemi.
The acquisition is the latest by Renesas, which last month said it would buy California-based power semiconductor company Transphorm for US$339 million as it focuses on gallium nitride chips that are used in electric vehicles.
The Japanese chipmaker was created in 2010 through a merger of NEC's chip division and Renesas Technology, which was established through a merger of the chip operations of Hitachi and Mitsubishi Electric.
