2021年2月8日

TOKYO, Japan, February 8, 2021 ― Renesas Electronics Corporation (“Renesas”, TSE:6723), a premier supplier of advanced semiconductor solutions, today announced it has reached an agreement with Dialog Semiconductor Plc (“Dialog”, XETRA:DLG), a leading provider of power management, charging, AC/DC power conversion, Wi-Fi and Bluetooth® Low Energy (BLE) technology based in the UK, on the terms of a recommended all-cash acquisition by Renesas of the entire issued and to be issued share capital of Dialog, thereby making Dialog a wholly-owned subsidiary of Renesas (the “Acquisition”).
This is a friendly acquisition procedure and Dialog’s Board of Directors has unanimously resolved this acquisition.

In compliance with the City Code on Takeovers and Mergers in the UK (the “Takeover Code”), Renesas has made an announcement of a firm intention to make an offer in relation to the Acquision as of February 8, 2021 in the UK.

1.Purpose of the Acquisition

Dialog is an innovative provider of highly-integrated and power-efficient mixed-signal ICs for a broad array of customers within IoT, consumer electronics and high-growth segments of automotive and industrial end-markets. Centered around its low-power and mixed-signal expertise, Dialog brings a wide range of product offerings including battery and power management, power conversion, configurable mixed-signal (CMIC), LED drivers, custom mixed-signal ICs (ASICs) and automotive power management ICs (PMICs), wireless charging technology, and more. Dialog also offers broad and differentiated BLE, WiFi and audio system-on-chips (SoCs) that deliver advanced connectivity for a wide range of applications; from smart home/building automation, wearables, to connected medical. All these systems complement and expand Renesas’ leadership portfolio in delivering comprehensive solutions to improve performance and efficiency in high-computing electronic systems. 
The Acquisition announced today demonstrates Renesas’ continued and unwavering commitment to further advance its solution offering. The complementary nature of the companies’ technological assets and the scale of the combined portfolios will enable Renesas to build more robust and comprehensive solutions to serve high-growth segments of the IoT and automotive markets. Renesas believes there is a compelling strategic and financial rational for the Acquisition because it:

(1)Scales Renesas’ IoT sector capabilities with Dialog’s low-power technologies

Dialog has a differentiated portfolio of low-power mixed-signal products, decades of experience in developing custom and configurable solutions for the world’s largest customers and expertise in low-power connectivity that are highly complementary to Renesas. The Acquisition of these low-power technologies enhances Renesas’ product portfolio and expands horizons in addressing high-growth markets in the IoT field.

(2)Unlocks further differentiation to Renesas system solution with connectivity

Bringing together Renesas and Dialog will extend the combined group’s reach to a broader customer base and open up additional growth potential in the key growth segments: industrial infrastructure, IoT and automotive. Dialog’s BLE, WiFi and audio SoCs are highly complementary to Renesas’ microcontroller (MCU)-based solutions. Combining Dialog’s innovative low-power Wi-Fi and Bluetooth® SoC and expertise with Renesas’ technologies will enable Renesas to further differentiate its system solution offering and extend its footprint in high-growth segments, including contactless IoT applications for smart home/building automation and healthcare. Renesas’ automotive solutions will also be enriched with connectivity for a wide range of security and safety applications.

(3)Adds engineering and design scale and more effective go-to-market initiatives

The past acquisitions brought diverse talent and management capabilities to expand Renesas’ global operations. The transaction announced today extends this effort and enables Renesas to add engineering and design scale in low-power analog and mixed-signal. The addition of Dialog’s strong R&D and geographical presence will also allow Renesas to expand its “Winning Combinations” lineup of innovative solutions and make its go-to-market initiatives more effective to provide seamless and borderless services to customers around the globe.

In 2017 and 2019, Renesas acquired Intersil Corporation and Integrated Device Technology, Inc. (“IDT”) to expand its analog solution lineup and to strengthen its kit solution offerings that combine its microcontrollers (MCUs), SoCs and analog products. At the same time as the closing of IDT acquisition, Renesas began capitalizing on the integration by offering “Winning Combinations”, compelling Analog + Power + Embedded Processing product combinations that help customers accelerate their designs and get to market at a faster rate. These combinations now add up to more than 210 solutions, focusing on verticals including industrial, infrastructure, automotive, and consumer segments to service more customer.

(4)Delivers earnings accretion and cost savings

Renesas anticipates incremental revenue growth of approximately 200 million USD (non-GAAP operating income, approximately 21.0 billion yen), from cross selling and access to fast-growing industries alongside continued innovation of solution offerings; expects cost savings from operational efficiencies to result in a financial impact of approximately 125 million USD (non-GAAP operating income per year on a run rate basis, approximately 13.1 billion yen). Renesas anticipates the cost savings to be fully realized in approximately three years after closing, and revenue growth to be fully realized in approximately four to five years after closing. Dialog’s underlying EBITDA (non-IFRS measure) for the 12-month period to 25 September 2020 was equivalent to 35.5 billion yen. Had the transaction been effective throughout that period, Renesas’ non-GAAP gross margin would have been approximately 0.6 percentage points higher.

2.Details of the Acquisition

(1)Target Company

Dialog Semicondutor Plc

(2)Method of Acquisition

Renesas will acquire 100% of the issued and to be issued share capital of Dialog through a scheme of arrangement (for details, refer to “3. Acquisition Method and Procedures” below).

(3)Shares Acquired, Price of Shares and Status Before and After Acquisition

(1)

Number of shares owned before the Acquistion

0 shares
(Number of voting rights: 0)
(Ownership ratio: 0.0%)

(2)

Number of shares to be acquired

72,387,613 shares (Note 1)
(Number of voting rights: 72,387,613)
(Ratio to the number of issued shares: 100.0%)

(3)

Acquisition Value

Cost of acquiring Dialog shares: approximately EUR 4,886 million
(approximately 615.7 billion yen)
Advisery fees, etc.: approximately 21 million USD

(4)

Number of shares owned after the Acquistion

72,387,613 shares (Note 1)
(Number of voting rights: 72,387,613)
(Ownership ratio: 100.0%)
(Ratio to the number of issued shares: 100.0%)

Note 1: The number of shares is the fully-diluted basis as of December 31,2020.

(4)Terms of the Acquisition

67.50 Euros per share of the issued and to be issued share capital of Dialog.
The Acquisiton premium is approximately 20.3% against the closing price of 56.12 Euros as of February 5, 2021 of Dialog.

(5)Acquisition Funds

The funds for the Acquisition will be procured through the loan agreement (Facilities Agreement) (borrowing of 735.4 billion yen) entered among Renesas, MUFG Bank, Ltd. and Mizuho Bank, Ltd.
In order to achieve an early improvement to an net interest-bearing debt/EBITDA ratio of less than 1.0 times and maintain our investment grade ratings, we will strengthen cash flow generation and convert the aforementioned funds for the Acquisition to longterm funds, such as equity finance by way of issuance of new shares. Thereby, we intend to maintain a strong financial base that enable us to pursue our future growth strategies. For details on the loan agreement, please refer to “Execution of Facilities Agreement for Dialog Acquisitoin” announced today.
As notified in the “Notice Concerning Filing of Shelf Registration Statement for  Issuance of New Shares” announced today, Renesas will prepare a framework that enables the company to flexibly issue new shares with the intention to produce a portion of the funds for the Acquisition, and have filed the Shelf Registration Statement in Japan for the issuance of new shares (up to 270.0 billion yen). Depending on the timing or other conditions of the equity finance, it is entirely possible that the portion of the aforementioned bank loans may not take place and instead funds procured through equity finance by wat of issuance of new shares may be used as the payment for the Acquisition.

(6)Completion Period

The Acquisition is expected to close by the end of calendar year 2021.

3.Acquisition Method and Procedures

Renesas will implement a scheme of arrangement pursuant to UK law. The scheme of arrangement is a method of acquisition whereby with the agreement of Dialog, the Acquisition can be executed by obtaining approvals from Dialog shareholders and the Court. Dialog must send necessary documents for the purpose to obtain approvals from Dialog shareholders within 28 days of this announcement, and through this method, Renesas will acquire 100% of the issued and to be issued share capital of Dialog.
The Acquisition needs to be approved by an affirmative vote of a majority of the shareholders in attendance at a meeting of shareholders convened by the Court and the number of the voting rights held by such shareholders who approve the Acquisition needs to represent 75% or more of the total number of voting rights In addition, approval must be obtained from the Court following the necessary regulatory clearances from the relevant countries including United States, China and Germany.
With the aforementioned conditions, the Acquisition is expected to become effective by the end of 2021.

4.Overview of Dialog


(1)

Name

Dialog Semiconductor Plc (XETRA:DLG)

(2)

Address

100 Longwater Avenue, Reading, RG2 6GP, United Kingdom

(3)

Title and name of the representative person

CEO: Dr. Jalal Bagherli

(4)

Business description

Development, manufacturing and sales of analog ICs such as mixed-signal devices

(5)

Capital amount

14,253 thousand USD
(1,497 million yen)

(6)

Date of foundation / incorporation

February, 1998

(7)

Major shareholders and their shareholding percentage

Schroder Investment Management limited
Norges Bank Investment Management
Tsinghua Holdings Corporation Limited
The Vanguard Group, Inc.
Dimensional Fund Advisors L.P.

5.55%
4.99%
2.95%
2.74%
1.91%

(8)

Relationship between parties

Capital relationship

There is no capital relationship between Renesas and Dialog. In addition, there are no capital relationships between related parties or companies of Renesas and related parties or companies of Dialog.

Personnel relationship

There is no personnel relationship between Renesas and Dialog. In addition, there are no personnel relationships between related parties or companies of Renesas and related parties or companies of Dialog.

Transactional relationship

There is no transactional relationship between Renesas and Dialog. In addition, there are no transactional relationships between related parties or companies of Renesas and related parties or companies of Dialog.

(9)

Results of operations and financial conditions for the past three fiscal years

Period

FY2017

FY2018

FY2019

 

Consolidated
Net Asssets

1,342.4 million USD
(140,954 million yen)

1,302.5 million USD
(136,763 million yen)

1,572.6 milliion USD
(165,121 million yen)

 

Consolidated
Total Assetts

1,576.8 miillion USD
(165,563 million yen)

1,717.1 million USD
(180,299 million yen)

2,177.0 million USD (228,583 million yen)

 

Consolidated Net Assets per Share

17.08 USD
(1,793.1 yen)

16.77 USD
(1,761.2 yen)

20.64 USD
(2,167.5 yen)

 

Consolidated
Revenue

1,352.8 million USD
(142,048 million yen)

1,442.1 million USD
(151,424 million yen)

1,566.2 million USD
(164,455 million yen)

 

Consolidated
Operating Profits

187.0 million USD
(19,637 million yen)

199.7 million USD
(20,969 million yen)

379.9 million USD
(39,885 million yen)

 

Consolidater Profit before tax

194.8 million USD
(20,454 million yen)

196.2 million USD
(20,600 million yen)

385.0 million USD
(40,429 million yen)

 

Consolidated
Net Income

169.4 million USD
(17,791 million yen)

139.8 million USD
(14,679 million yen)

301.5 million USD
(31,652 million yen)

 

Diluted Net Income per Share

2.21 USD
(232.1 yen)

1.80 USD
(189.0 yen)

3.96 USD
(415.8 yen)

 

Dividends
per Share

5.Business Outlook

With the completion of the Acquisition, Dialog will become Renesas’ consolidated subsidiary. We will announce the impact of the Acquisition on our business performance promptly according to the progress.

(Note) Figures in this press release are calculated at the rate as of February 3, 2021: 105 yen per U.S. dollar and 126 yen per Euro.

 

About Renesas Electronics Corporation
Renesas Electronics Corporation (TSE: 6723) delivers trusted embedded design innovation with complete semiconductor solutions that enable billions of connected, intelligent devices to enhance the way people work and live. A global leader in microcontrollers, analog, power, and SoC products, Renesas provides comprehensive solutions for a broad range of automotive, industrial, infrastructure, and IoT applications that help shape a limitless future. Learn more at renesas.com. Follow us on LinkedIn, Facebook, Twitter, and YouTube.

 

Cautionary note regarding forward-looking statements

This announcement may contain certain statements that are, or may be deemed to be, forward-looking statements with respect to the financial condition, results of operations and business of Renesas and/or the combined group with Dialog following completion of the Acquisition and certain plans and objectives of Renesas with respect thereto.  These forward-looking statements can be identified by the fact that they do not relate to historical or current facts. Forward-looking statements also often use words such as ‘anticipate’, ‘target’, ‘continue’, ‘estimate’, ‘expect’, ‘‘forecast’, ‘intend’, ‘may’, ‘plan’, ‘goal’, ‘believe’, ‘hope’, ‘aims’, ‘continue’, ‘could’, ‘project’, ‘should’, ‘will’ or other words of similar meaning. These statements are based on assumptions and assessments made by Renesas in light of its experience and perception of historical trends, current conditions, future developments and other factors it believes appropriate. By their nature, forward-looking statements involve risk and uncertainty, because they relate to events and depend on circumstances that will occur in the future and the factors described in the context of such forward-looking statements in this announcement could cause actual results and developments to differ materially from those expressed in or implied by such forward-looking statements. Although it is believed that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will provide to be correct and you are therefore cautioned not to place undue reliance on these forward-looking statements which speak only as at the date of this announcement.

Forward-looking statements are not guarantees of future performance. Such forward-looking statements involve known and unknown risks and uncertainties that could significantly affect expected results and are based on certain key assumptions. Many factors could cause actual results to differ materially from those projected or implied in any forward-looking statements. Due to such uncertainties and risks, readers are cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date of this announcement. Renesas undertakes no obligation to update or revise any forward-looking statement as a result of new information, future events or otherwise, except as required by applicable law.

There are several factors which could cause actual results to differ materially from those expressed or implied in forward-looking statements. Among the factors that could cause actual results to differ materially from those described in the forward-looking statements are changes in the global, political, economic, business and competitive environments, market and regulatory forces, future exchange and interest rates, changes in tax rates and future business combinations or dispositions.

No member of the Renesas group nor any of their associates, directors, officers, employers or advisers, provides any representation, assurance or guarantee that the occurrence of the events expressed or implied in any forward-looking statements in this announcement will actually occur.

Except as expressly provided in this announcement, no forward-looking or other statements have been reviewed by the auditors of the Renesas group. All subsequent oral or written forward-looking statements attributable to any member of the Renesas group, or any of their associates, directors, officers, employers or advisers, are expressly qualified in their entirety by the cautionary statement above.

Additional Information
This press release has been prepared for the purpose of announcing to the public certain matters relating to the agreement on commencement of acquisition procedure to make Dialog Semiconductor Plc a wholly-owned subsidiary, and not for the purpose of soliciting investment or engaging in any other similar activities within or outside Japan. In addition, this press release does not constitute an offer or sale of securities in the United States. Securities may not be offered or sold in the United States absent registration or an exemption from registration under the United States Securities Act of 1933, as amended.

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