Will the IDT Acquisition Actually Go Through?
Integrated Device Technology shares hit a multiyear high early on Tuesday after it was announced that the Japanese semiconductor firm Renesas Electronics would be acquiring it.
Integrated Device Technology Inc. (NASDAQ: IDTI) shares hit a multiyear high early Tuesday after it was announced that the Japanese semiconductor firm Renesas Electronics would be acquiring it.
For an idea of how significant this move is: IDT has not seen its shares this high since 2001.
Under the terms of the deal, Renesas will acquire IDT for $49 per share in an all-cash transaction representing an equity value of roughly $6.7 billion. This price represents a 29.5% premium over the unaffected price of IDT’s stock as of August 30.
The transaction is expected to be highly accretive to Renesas’s pro forma gross margin, earnings per share and free cash flow immediately after closing.
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However, this transaction is still subject to closing conditions. The United States has been particular about letting its semiconductor companies sell themselves overseas, especially with China. While China and Japan are very different countries with different trading histories with the United States, there are still some concerns over whether the Committee on Foreign Investment in the United States (CFIUS) will block the deal.
The closing of the transaction is expected to occur in the first half of 2019, following approvals by IDT shareholders and the relevant regulatory authorities.
Bunsei Kure, representative director, president and chief executive of Renesas, commented:
This acquisition will bring us complementary, market-leading analog mixed-signal assets and an incredibly talented group of professionals to help us boost our embedded solution capabilities. IDT’s products combined with our MCUs, SoCs and power management ICs will enable Renesas to widen its product offerings as well as to expand its reach into areas such as the growing data economy-related space.
Shares of IDT were last seen up about 11% at $46.79, with a consensus analyst price target of $40.36 and a 52-week trading range of $25.11 to $46.92.
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Chris Lange is a financial and geopolitical writer with more than a decade of experience covering a myriad of topics. He has published thousands of articles for 24/7 Wall St., with past coverage focused heavily on stocks, IPOs, healthcare, defense, global affairs, and technology.
His work has been quoted, or referenced by a number of outlets including Business Insider, USA Today, Yahoo Finance, MSN, The Motley Fool, and many other publications. A graduate of Southwestern University, he studied business with a focus on investments and has previous experience in banking and startups.
When not reading or writing the news, he is following his passion for Lacrosse, playing chess, or building solar projects with his dad.
