Renesas agrees $3.2bn buyout of Intersil

Japanese chip maker Renesas Electronics Corp.RNECY -3.61 % agreed to buy Intersil Corp.ISIL 2.07 % for about $3.2 billion, a deal expected to immediately enhance its gross margins and earnings. The primary motive for the acquisition by Renesas, a supplier of semiconductor solutions, is to expand its product offerings to auto manufacturers, who are building cars with advanced technologies and looking to incorporate self-driving capabilities.

That’s a 14% premium to Intersil’s closing price of 19.76 on the stock market today, but 44% above its price on August 19, when Renesas deal talk began.

Renesas will pay United States dollars 22.5 per share to Intersil.

Renesas, which controls more than 40% of the market of global microcontroller chips used in automobiles, is trying to refocus its business strategy after a downturn in the personal computer and smartphone chip business. (San Jose, Calif.) was also interested in grabbing Intersil (see Renesas, Maxim In Duel for Intersil ).

“We managed to resolvedown at a price nearly at the upper limit” Renesas CEO Bunsei Kure.

Renesas, created from the semiconductor units of several Japanese companies, was bailed out by a state fund and key clients following the Fukushima natural disaster five years ago, but has since been on a recovery path that has left it with a important war chest.

By combining those products, Kure said he expected to bolster income by as much $170 million annually after four to five years.

The acquisition combines two industry leaders in their respective segments and the merger will give Renesas deep expertise across a number of state-of-the-art technologies and end markets and enable the company to become a complete solution provider of embedded systems, the company said.

Renesas President and CEO Bunsei Kure said Tuesday Intersil’s portfolio of analog and power devices will strengthen many of its initiatives in several areas such as automotive, industrial, infrastructure and its growing Internet of Things engagements.