It’s an odd thing when two companies you really like get together. I’ve thought for some time that both Japan’s Renesas (OTCPK:RNECY) and the U.K.’s Dialog Semiconductor (OTCPK:DLGNF) were underrated and undervalued by the Street, though both have done well since my last write-ups on the companies (Renesas here and Dialog here).
Apparently, Renesas agrees that there’s more to Dialog than the Street thinks and that the company’s technology can do a lot more. On February 8, Renesas and Dialog announced that Renesas will acquire Dialog for EUR 67.50 per share, and add Dialog’s capabilities in power management, connectivity, and other mixed-signal chips to its own capabilities in MCUs, SoCs, and mixed-signal.
I believe Dialog shareholders are getting a fair price, but given the sentiment in the sector, you could perhaps argue that “fair” is undervalued. In any case, I expect little risk of the deal not going through. While I believe Renesas shares remain attractive, whether the modest spread between the deal price and Dialog's share price (EUR 2/share as of this writing) is sufficient reward for a trade is harder to say.
Follow this link to the full article at Seeking Alpha:
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