Renesas And IDT - It May Or May Not Be True, But It Makes Some Sense

Once a hotbed of M&A activity, deal activity in the semiconductor sector has cooled off considerably this year as buyers are digesting their meals and potential acquirers are trying to make sense of the current market, given lengthening lead times in many product categories, rising trade tensions, and some concerns about deal approval criteria. Even so, I’ve continued to maintain that Integrated Device Technology (IDTI) is a “when, not if” seller and Japan’s Renesas (OTCPK:RNECY) is a “when, not if buyer,” and while I hadn’t previously tied these two together, there’s a rumor now that Renesas is close to a deal to acquire this high-quality mid-cap growth semiconductor company.

Although I wouldn’t call Renesas a prime strategic acquirer of IDT, I can see how the company’s capabilities in auto sensors, power management, and wireless power would hold a lot of appeal, not to mention the strong growth outlook for IDT in other markets like memory interfaces, industrial sensors, and wireless charging. Assuming a normal level of post-deal cost savings, I believe Renesas could pay something in the low-to-mid $40s for IDT and still reap worthwhile (double-digit) long-term returns on the deal.

Read more here:
Renesas And IDT - It May Or May Not Be True, But It Makes Some Sense