Renesas Electronics Announces Absorption-Type Merger (Simplified/Short-Form Merger) with Consolidated Subsidiary

12 May 2017

TOKYO, Japan, May 12, 2017—Renesas Electronics Corporation (TSE: 6723, “Renesas Electronics”), a premier provider of advanced semiconductor solutions, today announced that, following the approval of Renesas Electronics' Board of Directors on May 12, 2017, it will consolidate its subsidiary Renesas System Design, Co., Ltd. (“Renesas System Design”) through an absorption-type merger (“Merger”).


Certain disclosure items and details have been omitted due to the Merger being an absorption-type merger of a wholly-owned subsidiary.


1. Purpose of Merger

In October 2013, Renesas embarked on structural reforms aimed at building a reliable corporate structure capable of generating sustainable profit a stable business foundation, In order to thrive in the global marketplace, on November 2, 2016 Renesas announced its “mid-term growth strategy” and is currently working to expand and strengthen its business portfolio for accelerated growth. One element of the strategy was the decision to acquire Intersil Corporation (“Intersil”), which is engaged in the development, manufacturing, sale, and service of analog semiconductor devices. As of February 24, 2017, Renesas completed the acquisition of Intersil.


Following these changes, in the press release titled, “Renesas Electronics Announces Organizational Reforms for Accelerated Growth” dated March 3, 2017, Renesas announced that it will be changing its current business structure, including Intersil Group businesses, which is classified by functions, such as sales & marketing, business units and design and development, into a revitalized structure with clear roles and responsibilities. The new business structure will consist of three business units starting July 1, 2017: the "Automotive Solution Business Unit" (Note 1), the "Industrial Solution Business Unit" (Note 2) and the "Broad-Based Solution Business Unit".


With a strong emphasis on technology and device development that are the key to providing solutions, which are the source of Renesas’ profit, Renesas decided to consolidate Renesas System Design which is responsible for the design and development of semiconductor devices through an absorption-type merger and to integrate its functions into each of the three business units. By enabling rapid and consistent decision-making from sales and marketing through to design and development within each business unit, Renesas aims to strengthen the solution ownership within the respective business units and accelerate growth.


(Note 1) The 1st Solution Business Unit will be renamed to Automotive Solution Business Unit as of July 1, 2017.

(Note 2) The 2nd Solution Business Unit will be renamed to Industrial Solution Business Unit as of July 1, 2017.

(Note 3) Renesas Electronics and Renesas System Design implemented a change of the fiscal term in which the fiscal year-end changed from March 31 to December 31 starting from the fiscal year 2016. The fiscal year ended December 31, 2016, in which the transition to the new accounting period took place comprises the financial results for the nine months from April 1, 2016, to December 31, 2016.


2. Summary of Merger

(1) Schedule of Merger

Approval of Board of Directors regarding the Merger May 12, 2017
Conclusion of absorption-type merger agreement May 12, 2017
Date of Merger (effective date) July 1, 2017 (planned)

(Note) Renesas Electronics will follow the procedure for a simple absorption-type merger and Renesas System Design will follow the procedure for a short-from merger as stipulated under Article 796, §2 and Article 784, §1 of the Japan Corporation Law, respectively both of which do not require approval of the merger agreement by a general meeting of shareholders.


(2) Method of Merger

The Merger will be conducted through an absorption-type merger method in which Renesas Electronics will be the surviving company and Renesas System Design will be dissolved as the absorbed company.


(3) Distribution of Assets

Since Renesas System Design is a wholly-owned subsidiary of Renesas Electronics, there will be no issuance of stocks or other provision of compensation in connection with the Merger


(4) Share subscription rights and bonds with share subscription rights

No share subscription rights or bonds with share subscription rights are issued.


3. Overview of parties to the Merger (as of December 31, 2016)

(1) Company Name Renesas Electronics Corporation (surviving company)
(2) Address 3-2-24, Toyosu, Koto-ku, Tokyo
(3) Representative Tetsuya Tsurumaru, Representative Director, Chairman
Bunsei Kure, Representative Director, President & CEO
(4) Major Operations Research, development, design, manufacture, sale, and servicing of semiconductor products
(5) Capital 10.0 billion yen
(6) Established November 1, 2002
(7) Shares Issued 1,667,124,490 (including 2,581 treasury stocks)
(8) Fiscal Term December 31
(9) Major Stockholders and Ownership Ratios

Innovation Network Corporation of Japan: 69.15%

Japan Trustee Services Bank, Ltd. (Re-trust of Sumitomo Mitsui Trust Bank, Limited / NEC Corporation pension and severance payments Trust Account): 8.11%

Hitachi, Ltd.: 7.66%

Mitsubishi Electric Corporation: 6.26%

(10) Consolidated Net Assets 422,393 million yen
(11) Consolidated Total Assets 823,054 million yen
(12) Consolidated Net Assets per Share 252.03 yen
(13) Consolidated Net Sales 471,031 million yen
(14) Consolidated Operating Income 54,711 million yen
(15) Consolidated Ordinary Income 49,986 million yen
(16) Net Income Attributable to Shareholders of Parent Company 44,119 million yen
(17) Net Income per Share 26.46 yen
(1) Company Name Renesas System Design, Co., Ltd. (absorbed company)
(2) Address 5-20-1, Jyosuihoncho, Kodaira-shi, Tokyo
(3) Representative Tatsuya Nishihara, President
(4) Major Operations Design of semiconductor devices and integrated circuits, and development, design, production and sale of electronics devices and application products, etc.
(5) Capital 0.1 billion yen
(6) Established April 1, 2001
(7) Shares Issued 6,000
(8) Fiscal Term December 31
(9) Major Stockholders and Ownership Ratios Renesas Electronics Corporation: 100%
(10) Net Assets 4,317 million yen
(11) Total Assets 20,312 million yen
(12) Net Assets per Share 719,479.67 yen
(13) Net Sales 34,208 million yen
(14) Operating Income 496 million yen
(15) Ordinary Income 483 million yen
(16) Net Income Attributable to Shareholders of Parent Company 536 million yen
(17) Net Income per Share 89,293.57 yen

4. Situation Following the Merger

There will be no changes to the company name, business activities, headquarters address, representative, capital, and end of fiscal year of Renesas Electronics as a result of the merger.


5. Future Outlook

Since the Merger involves Renesas Electronics and Renesas Electronics’ consolidated wholly-owned subsidiary, no major impact is anticipated on Renesas Electronics' consolidated financial results.

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 Follow us on LinkedIn, Facebook, Twitter, and YouTube.

The content in the press release, including, but not limited to, product prices and specifications, is based on the information as of the date indicated on the document, but may be subject to change without prior notice.