Renesas Seals The Deal With Integrated Device Technology

It didn’t take long for the rumors of Renesas Electronics’ (OTCPK:RNECY) (6723.T) interest in Integrated Device Technology (IDTI) to bear fruit, with the two companies announcing late Monday night that Renesas had agreed to acquire IDTI for $49/share in cash. The deal structure is a fairly straightforward cash transaction, with Renesas anticipating a deal close in 2019 pending regulatory approvals.

Although Renesas is paying a little more than I expected, management’s target for post-merger revenue synergies was higher than I had modeled. Even with a modest discount to those projections (though Renesas has exceeded expectations with its Intersil integration), this looks like an accretive, worthwhile deal for Renesas that will augment its auto business, add valuable analog/mixed-signal capabilities, and better diversify Renesas’s auto-heavy business mix. Although Renesas shares have been hammered this year as the company goes through a tough inventory adjustment cycle, the long-term value looks interesting at these levels.

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Renesas Seals The Deal With Integrated Device Technology