Shares in Dialog Semiconductor 0OLN, +5.98% soared 21% on Monday, after Japan’s Renesas Electronics snapped up the U.K.-listed Apple supplier for €4.9 billion ($5.9 billion).
The all-cash offer of €67.50 a share represents a 20% premium to Dialog’s closing share price on Friday, and a 52% premium to a weighted three-month average, the company said in a statement.
Dialog DLGNF, +8.23%, whose clients include Apple AAPL, -0.31%, Samsung Electronics 005930, -0.60%, Panasonic 6752, +2.80% and Xiaomi 1810, -0.18%, said that the deal was a “compelling opportunity” for its shareholders and that its board would unanimously recommend the offer.
Shares in Dialog DLG, +16.57% rose as much as 21% in early European trading on Monday, before falling back to trade 16.57% higher.
“We believe Renesas’s strong footprint in microcontrollers and system-on chips would be complementary to best leverage Dialog’s products,” said analysts at UBS in a note to clients on Monday.
Renesas 6723, -3.61%, one of the world’s largest suppliers of automotive chips, saw its stock fall 3.61% in Tokyo on Monday, as investors digested the deal, which is the latest in the company’s four-year-long acquisition spree. That included the Japanese company’s takeover of U.S. firm Integrated Device Technology for $7.2 billion in 2018.
The acquisition of Dialog marks the second time a U.K. chip maker has become the target of overseas bidders after Nvidia NVDA, -0.54% in September 2020 bought SoftBank Group’s 9984, +4.45% chip division Arm for $40 billion.
The deal comes amid a surge of consolidation in the semiconductor industry in recent months. In October, AMD AMD, +0.07% bought rival Xilinx XLNX, +0.15% in an all-stock deal valued at $35 billion, while in January Intel sold its NAND memory unit to SK Hynix for $9 billion.
The takeover of Dialog could attract the attention of U.K. regulators, which last year announced the biggest shake-up of the country’s takeover rules in two decades in a bid to protect strategic assets from hostile bidders.
The U.K.’s competition regulator said in January that it would start an investigation into Nvidia’s takeover of Arm, including looking at whether, following the takeover, Arm will have an “incentive to withdraw, raise prices or reduce the quality of its IP [intellectual property] licensing services to Nvidia’s rivals.”
Read: Nvidia’s $40 billion takeover of Arm to be investigated by U.K. competition regulator
“While the deal is unlikely to face scrutiny from U.K. regulators the fact that the CMA [Competition and Markets Authority] is looking at the recent deal between Nvidia to acquire Arm Holdings from SoftBank, there is a risk that we might see them cast an eye over this one,” said Michael Hewson, chief market analyst at CMC Markets U.K., in a note to clients on Monday.
UBS analysts said that, given the small size of Dialog and market fragmentation in auto/industrial, they believed antitrust risk is likely to be “relatively low.”
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