Renesas Weighs Chip Firm Buy -- WSJ

By Takashi Mochizuki

TOKYO -- Japanese chip maker Renesas Electronics Corp. on Monday said it is in talks to buy U.S.-based chip maker Intersil Corp., a move that could strengthen the Japanese company's business of making semiconductors for automobiles.

"We are considering various options for growth including" a possible deal with the U.S. company, Renesas said in a statement.

A deal, if reached, would be valued at around 300 billion yen ($3 billion), according to a person familiar with the discussions.

Intersil shares rose 19% to $18.64 in midday trading in New York on Monday. The sharp advance put the company's market value at about $2.53 billion.

The possible takeover, which was reported earlier Monday by the Japanese business daily Nikkei, would represent a step by Renesas to stay ahead in an industry that has seen considerable recent consolidation.

Intersil's customers include companies in the automotive and aerospace businesses. The company had revenue of $522 million and net income of $7.2 million in 2015.

Talks between the companies follow a multiyear acquisition wave in the chip industry, including 67 deals in 2015 that reached a record $125.7 billion in transaction value, according to data provider Dealogic. Through late July, the research firm tallied 41 mergers or acquisitions worth $70 billion.

An Intersil spokeswoman declined to comment on what she characterized as speculation.

Intersil, based in Milpitas, Calif., traces its lineage in part to a chip startup founded in 1967 by Jean Hoerni, one of the industry's pioneers. The business was acquired by General Electric Co. and later by Harris Corp. The Intersil name, which had been retired, reappeared in 1999 when the operations were spun off to form an independent company.

The U.S. company sells semiconductors for a variety of applications that include cars, computers, consumer electronics products and aerospace hardware. Intersil Chief Executive Necip Sayiner, who was appointed in 2013 to lead a turnaround effort, has tried to focus the business on chips used to manage power. Intersil also has a major sideline making chips designed to withstand radiation exposure, a feature needed in aerospace gear.

It posted fiscal second-quarter profit of $1.4 million on revenue of $134 million, up 3.7% over a year earlier.

Innovation Network Corp. of Japan, a Japanese government-backed fund that owns a majority stake in Tokyo-based Renesas, was looking for a buyer for the company last year, people familiar with the matter said at the time, but no deal has resulted.

Renesas was formed through a fusion of chip-making units of NEC Corp., Mitsubishi Electric Corp. and Hitachi Ltd.

--Don Clark contributed to this article.

Write to Takashi Mochizuki at takashi.mochizuki@wsj.com

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August 23, 2016 02:48 ET (06:48 GMT)

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