Notice Regarding Issuance of Stock Acquisition Rights as Stock Options

25 Mar 2019

TOKYO, Japan― Renesas Electronics Corporation (“Renesas”, TSE: 6723), a premier supplier of advanced semiconductor solutions, announced in the press release entitled “Regarding Acquisition of Stock of Integrated Device Technology, Inc.” issued on September 11, 2018, to reach an agreement with Integrated Device Technology, Inc. (“IDT”, NASDAQ: IDTI), a U.S.-based analog semiconductor supplier, whereby IDT will become a wholly-owned subsidiary of Renesas (the “acquisition”). Subject to the completion of the acquisition, Renesas today announced that it has resolved at the Board of Directors held today, certain subscription items for stock acquisition rights to be issued as stock options for a corporate officer of Renesas and directors (excluding outside directors), corporate officers and employees of IDT and its subsidiaries. Renesas has also determined items regarding taking applications or persons who will receive these stock options. The terms and conditions are outlined below. As announced in the press release entitled “Renesas and IDT Announce Final Regulatory Approval for Renesas’ Proposed Acquisition of IDT” issued on March 23, 2019, the acquisition has been approved by the IDT’s shareholder meeting on January 15, 2019 PST and Renesas has received notification from the Committee on Foreign Investment in the United States (“CFIUS”) on March 22, 2019 PDT, March 23, 2019 JST, that the investigation of the companies’ proposed merger transaction is complete. The acquisition is now expected to close on March 29, 2019 PDT, March 30 JST, subject to customary closing conditions.

[Outline of Resolutions]

  1. Renesas will accept applications for directors (excluding outside directors), corporate officers and employees of IDT located outside Japan (all of them are scheduled to retire before the allotment date of the stock options), who will receive the "Renesas Electronics Corporation Stock Options for FY2019 (Series No.1)," and will grant those stock options on April 9, 2019 (Japan Standard Time).
  2. Renesas will accept applications for employees of IDT’s subsidiaries located in Japan, who will receive the "Renesas Electronics Corporation Stock Options for FY2019 (Series No.2)," and will grant those stock options on April 9, 2019 (Japan Standard Time).
  3. Renesas will accept applications for a corporate officer of Renesas and directors (excluding outside directors), corporate officers and employees of IDT and its subsidiaries located outside Japan, who will receive the "Renesas Electronics Corporation Stock Options for FY2019 (Series No.3)," and will grant those stock options on April 9, 2019 (Japan Standard Time).

I. Reason for issuance of stock acquisition rights as stock options

In relation to the acquisition, Renesas has concluded a merger agreement with IDT under which IDT shares are to be acquired at a price of US$49.00 per share, for a total equity value of approximately US$6.7 billion (approximately 733 billion yen at an exchange rate of 110 yen to the dollar). Under the merger agreement, IDT shares will be retired when the acquisition is completed, and restricted stock units (RSUs) and performance stock units (PSUs) for existing IDT shares allocated as stock options to the directors (excluding outside directors), corporate officers and employees of IDT and its subsidiaries will be converted to stock acquisition rights to be issued as stock options for Renesas common shares. By issuing such stock options equivalent to those offered by IDT prior to the completion of the acquisition to the directors (excluding outside directors), corporate officers and employees of IDT and its subsidiaries, Renesas will be able to retain excellent talents as well as to have them share the advantages and risks of rises and falls in the value of Renesas shares with all the shareholders. Therefore, the main purpose of the stock options is to encourage the directors, corporate officers and employees of IDT and its subsidiaries to contribute to increasing the share price and enterprise value, which will ultimately lead to improving the corporate value of Renesas Group.

Renesas plans to grant 625,318 stock options this time, which accounts for approximately 3.7 percent increase in the number of Renesas shares issued and outstanding (1,668,385,390 shares as of December 31, 2018).

These stock acquisition rights include both those vested on the date of allocation and those vested after a fixed period from the allocation date. Therefore, the number of Renesas common shares issuable following the vesting of the stock acquisition rights on the allotment date of the stock acquisition rights will account for approximately 1.5 percent of the number of Renesas shares issued and outstanding. Renesas expects the term from the allotment date until the vesting date of the stock options to last up to 3.9 years.

The calculation of the total number of stock options to be granted is based on a stock price of 500 yen per share at an exchange rate of 113 yen to the US dollar. As stipulated in the above-mentioned merger agreement, the number of stock acquisition rights to be converted from the RSUs and PSUs for existing IDT shares will be determined based on the average stock price of Renesas shares and the average exchange rate during a fixed period, which will last up until two business days prior to the completion of the acquisition. Renesas plans to announce the final number of stock options when the information becomes available on the allotment date.

For further details, please see the  full text here (PDF: 328 KB).

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, home electronics, office automation, and information communication technology applications that help shape a limitless future. Learn more at renesas.com.

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