Japan's Renesas Electronics has agreed to buy British chipmaker Dialog Semiconductor Plc. for €4.9 billion ($5.9 billion), in the latest sale of a globally competitive UK semiconductor business to a foreign buyer.
Reading-headquartered Dialog is a major supplier to Apple. The fabless semiconductor specialist makes integrated circuits (ICs) that power mobile devices, IoT and Industry 4.0 solutions. It has 2,300+ employees, drove $1.42 billion in full-year revenues in 2019, and is listed on the Frankfurt Stock Exchange.
The combination of companies will open up new markets in industrial infrastructure, IoT and automotive, the two said, adding that Dialog’s BLE, WiFi and audio SoCs are "highly complementary" to Renesas’ portfolio.
Dialog accepted the all-cash offer at 67.50 euros per share on Monday; a 20% premium to Friday's close of 56.12 euros. Dialog's shares soared, Renesas's dropped on the news.
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"The transaction we announced today represents our next important step in catapulting Renesas’ growth plan to achieve substantial strategic and financial benefits," said Hidetoshi Shibata, President and CEO of Renesas.
“Dialog has a strong culture of innovation along with excellent customer relationships and serves fast growing areas including IoT, industrial and automotive. By bringing Dialog’s talented team and expertise into Renesas, together, we will accelerate innovation for customers and create sustainable value for our shareholders.”
The buyout may prove controversial with UK policy makers, amid a renewed focus on national champion technology companies post-Brexit, and as NVIDIA's $40 billion buyout of Arm runs into increasing headwinds from industry partners and regulators. (Conversely, if regulators do move to block Arm's buyout amid competition fears, letting the far less globally problematic Dialog sale proceed would signal the kind of global openness UK political leaders are keen to signal amid trade friction with Europe).
Dr Jalal Bagherli, CEO of Dialog said: "We have built a strong foundation of high-performance analog and power efficient mixed-signal expertise, extended our product portfolio and applied our technologies into markets including 5G, wearables, automotive, smart home, connected medical and industrial IoT. This compelling platform –combined with Renesas’ leading embedded compute, analog and power portfolio –creates even greater growth opportunities in today’s increasingly connected world. The Dialog team is excited to join forces with Renesas."
He added: "The combined company will be in an even stronger position to provide innovative products for these markets, building on Renesas’ extensive sales, distribution and customer support capabilities.”
The deal comes after Dialog itself made a number of recent acquisitions, buying Germany’s Creative Chips GmbH – a fabless chip firm and Arm-approved design partner – for $80 million cash and Californian chip maker Adesto Technologies for $500 million in 2019 and 2020 respectively.