The deal between Renesas and Dialog was approved in both parties

In February 2021, several media reported that Renesas Electronics Corp, which is the Japanese semiconductor manufacturer, agreed to acquire Dialog Semiconductor PLC. Dialog accepted the all-cash offer (about $5.9 billion), at €67.50 per share and the price was offered by a 20% premium to Dialog’s Friday (February 5th) close of €56.12. Dialog‘s shares were risen by around 25% since January 2021 and this is because strong demand for Apple’s 5G products and takeover rumor.

Dialog and Renesas have been working together more than a decade. The UK technology company, which specializes in designing power management chips, mentioned that it would collaborate with Renesas on car computing platforms.

Both companies are concerning the semiconductor supply chain because Apple has grappled with a shortage of vital chips that manage power consumption in iPhones and other devices. In the automotive industry, a semiconductor shortage is forcing automotive manufacturers to halt production lines and affects their relationship with chip suppliers. Both Dialog and Renesas are suppliers to Apple. There were reports that the American tech giant tried to purchase Renesas SP Drivers, which was owned (55%) by Renesas, in 2014. The unit, which managed LCD displays, was sold to Synaptics Inc. by $475 million deal in the end.

Who is Renesas?

Renesas Electronics Corporation is a Japanese semiconductor manufacturer, was founded in 2002 and its head office is located in Tokyo. As of December 31st, 2019, the company had more than 18 thousands employees.

Renesas offers design innovation with semiconductor solutions that enable billions of connected, intelligent devices to enhance the way people work and live. The company is a global leader in microcontrollers, analog, power, and SoC products. Renesas provides comprehensive solutions for a wide range industries such as automotive, industrial, home electronics, office automation, and information communication technology applications.

Purpose of Renesas is “To Make Our Life Easier” and there are five elements in corporate culture: Transparent, Agile, Global, Innovative and Entrepreneurial.

Who is Dialog?

Dialog Semiconductor PLC is an American founded UK-Domiciled semiconductor manufacturer. Its head office is located in the United Kingdom and its business covers a global sales, Research & Development, and marketing. The company operates a fabless business model.

Dialog is a leading provider of standard and custom integrated circuits (ICs) that are used in the Internet of Things (IoT) and Industry 4.0 applications. Dialog’s proven expertise boosts the next generation of today’s devices by providing Battery Management, Bluetooth® low energy, Wi-Fi, Flash memory, and Configurable Mixed-signal ICs. The company improves power efficiency, reduce charge times, and increase performance and productivity at the same time. Its passion for innovation and entrepreneurial spirit ensures that they can be a leading position to power efficient semiconductor technology for IoT, mobile, computing and storage, connected medical, and automotive markets.

Post-merger Integration is critical

According to Renesas’s announcement about the deal with Dialog (in Japanese), the Japanese semiconductor giant expects that it can increase sales revenue as well as cost reduction thanks to economies of scale and economies of scope. As we can see the other article about these concepts, both economies of scale and economies of scope are key words for merger & acquisition.

Based on the announcement, each company’s products are complementary each other so that economies of scope will be realized. In addition to this, both companies seek similar corporate culture and share the same experience as the supplier to Apple. These factors will work for post-merger integration (PMI) positively. PMI is easier said than done, and some companies are failed in it in fact. People, culture, communication and process are key success factors for PMI, and the deal expects cost reduction due to work efficiency that will be achieved by PMI. However, we do not know how the reality works at the present.