Japanese chipmaker Renesas steps up deal spree with $5.8bn Altium bid

Renesas Electronics has agreed to pay A$8.8bn ($5.8bn) in cash to acquire Australian software design tools provider Altium, as the Japanese chipmaker steps up an acquisition spree to diversify its business.

Renesas, which is one of the leading suppliers of chips to the world’s car industry, including Japan’s Toyota and Nissan, has been pushing to diversify and add scale in the aftermath of supply chain stresses and due to geopolitical tensions, with China being a key source of revenues.

The acquisition of Altium would be Renesas’s fourth big deal since 2017, as it invests aggressively to broaden its footprint into higher margin businesses such as products for data centres and consumer devices. 

The deal, approved by both boards but needing shareholder and regulator backing, is the latest in what bankers see as a growing wave of cash-rich Japanese companies pushing for overseas acquisitions in response to their shrinking domestic market. The biggest attempt to date came in December, with Nippon Steel launching an $15bn all-cash bid for US Steel.

Renesas recently bought Apple supplier Dialog for €4.9bn, having also sealed deals for US rival Integrated Device Technology for $7.2bn in 2019 and for US chipmaker Intersil for $3.2bn in 2017.

A national champion created in 2010 through a government-orchestrated merger of the chip units of Hitachi, Mitsubishi Electric and NEC, Renesas uses Altium’s software design tools for its own development needs. It said the deal would help reduce the complications for customers as they design electronics. 

Aram Mirkazemi, the chief executive of Altium who joined the business in the late 1980s and will continue to lead it after the deal closes, said he had worked closely with Renesas as a partner for two years and supported the “grand vision” of the Japanese company to make electronics accessible. 

“I strongly believe that electronics is the single most critical industry to building a smart and sustainable world,” he said in a statement. 

Altium, which designs tools for creating circuit boards, is one of Australia’s oldest technology companies. It is listed on the Australian stock exchange but is headquartered in La Jolla, California. 

The bid, which has been recommended by the Altium board, is pitched at a 34 per cent premium to Altium’s share price and is 31 per cent above its all-time high. Its shares soared almost 30 per cent on the Renesas offer.

Paul Mason, an analyst with E&P, said: “This is clearly a positive development for the Altium share price. Given unanimous support from the board, as well as the large premium to prior close, we would expect the transaction to be supported and go through.”

US company Autodesk attempted a takeover of Altium in 2021 with a A$5.25bn offer that the Australian company rejected as undervaluing its business.

The acquisition, if completed in the second half as predicted, would be one of the largest takeovers of an Australian tech company and mean another delisting of a large ASX-listed business after the sale of Sydney Airport, Afterpay, Newcrest and Oz Minerals.

Altium traces its roots to 1985 when University of Tasmania staffer Nick Martin founded Protel, which developed software that reduced the cost of developing circuit boards for engineers. 

The business grew rapidly and floated on the ASX during the tech boom in 1999, when it raised A$30mn. It later transferred its headquarters to China before Martin, who led the company for 25 years, was ousted in 2012. The company later relocated to California and has grown significantly over the past decade as demand for its software has boomed. 

Deutsche Bank advised Renesas while JPMorgan advised Altium.