Japanese chipmaker Renesas to buy software firm Altium for $5.9 billion

Japanese semiconductor firm Renesas Electronics said Thursday that it would acquire Sydney-listed software company Altium for 9.1 billion Australian dollars ($5.89 billion) in cash, as it seeks to streamline its electronics design process.

Renesas said it would pay AU$68.50 per share, representing a 33.6% premium to Altium’s closing price of AU$51.26 on Wednesday.

Australia-listed shares of Altium jumped nearly 30% to near AU$66, while Tokyo-listed Renesas fell 3.2%.

The Japanese chipmaker, which would finance the deal with bank loans and cash on hand, said the acquisition would allow it to better manage electronics designing for customers as Altium’s main business is making tools to design chip circuit boards.

“Japan Inc is dead-set serious to regain global leadership and dominance in the world’s chip-making ecosystem,” Jesper Koll, expert director at Monex Group told CNBC, highlighting the massive pools of idle capital that Japanese firms have.

Koll said “corporations have almost $5 trillion of cash reserves/retained earnings on their balance sheets combined with de-facto zero interest rate funding from the government” which is helping Japan Inc to fund acquisitions and the build-up of a comprehensive chips ecosystem.

“It is perfectly reasonable to forecast that by 2028-2030, Japan Inc will own and operate as much as one-third of the global chip-making ecosystem,” which is more than double from its current share, Koll said.

The deal has been unanimously approved by the board of both companies but its completion is subject to approvals from Altium shareholders, Australian court and regulators, Renesas said.

“Having worked closely with Renesas as a partner for nearly two years, we are excited to be part of the Renesas team as we continue to successfully execute and grow,” said Aram Mirkazemi, chief execvutive officer of Altium.

The deal comes a month after Renesas agreed to buy Nasdaq-listed Transphorm for $5.10 per share in an all-cash deal worth $339 million. Transphorm’s acquisition would provide Renesas with in-house gallium nitride chips used in electric vehicles.