Altium agrees to $9.1b buyout by Renesas, marking a strategic expansion in electronics design

Australian-based software company Altium (ASX: ALU) is preparing to be bought out by Japanese advanced semiconductor solutions firm Renesas Electronics by way of a $9.1 billion scheme implementation agreement.

Under the terms of the proposal, Renesas will acquire all of Altium’s outstanding shares for a cash price of $68.50 each, representing a total enterprise value of $8.8b.

The consideration is a premium of approximately 39% on Altium’s one-month volume weighted average price of $49.43 per share and 31% above its all-time high closing price of $52.34 per share recorded on 12 February.

Based on figures at end June 2023, Altium will bring to the table approximately US$263 million in revenue, a 36.5% EBITDA (earnings before interest, taxation, depreciation and amortisation) margin and 77% recurring revenue.

Renesas said it would finance the transaction with existing cash reserves and third-party financing.

The scheme implementation agreement will see Altium and Renesas join forces to establish an integrated and open electronics system design and lifecycle management platform that allows for collaboration across component, subsystem and system-level design.

The addition of Altium’s design software and cloud platform capabilities to the Renesas suite is expected to make electronics design accessible to a broader market and accelerate innovation.

It is believed to align with Renesas’ digitalisation strategy and represents the company’s first significant step in offering an enhanced user experience and innovation for electronics system designers.

Critical industry

Altium chief executive officer Aram Mirkazemi said the Renesas buyout supports the idea that electronics is the “single most critical industry” to building a smart and sustainable world.

“The visionary leadership and commitment that Renesas has to making electronics accessible to all resonates strongly with Altium,” he said.

“Having worked closely with Renesas as a partner for nearly two years, we are excited to become part of their team as we continue to execute and grow.”

Unanimous recommendation

Altium chair Sam Weiss said the board had unanimously recommended that shareholders vote in favor of the Renesas buyout in the absence of any superior proposals.

“The proposal put forward by Renesas is compelling for Altium investors. It is a strong endorsement of the company’s strategy and performance over many years,” he said.

“The board and management have carefully evaluated the proposed scheme consideration against [Altium’s] medium and long-term growth prospects and market opportunities.”

“The directors have unanimously formed the view that the proposal represents attractive and certain value for Altium shareholders.”

Realising a vision

Renesas chief executive officer Hidetoshi Shibata said the acquisition of Altium would realise its vision of making electronics design accessible to the broader market and to allow more innovation through a cloud-based platform.

“[The] addition of Altium will enable us to deliver an integrated and open development platform, making it easier for businesses of all sizes and industries to build and scale their systems,” he said.

“We look forward to working with Altium’s talented team as we continue to invest and drive our combined platform to the next level of value for our customers.”

Altium history

Altium was founded in 1985 as one of the world’s first printed circuit board (PCB) design tool providers.

Today, its PCB software is one of the most popular tools on the market, empowering and connecting PCB designers, part suppliers and manufacturers to develop and manufacture electronics products faster and more efficiently.

In 2020, Altium launched the cloud-based Altium 365 platform to create seamless collaboration points across the PCB development process.

In June, Renesas announced it had worked with Altium to standardise the development of all PCB designs on the platform and had added its electronic computer-aided design library to the Altium public vault.

The move will allow customers to choose Renesas parts directly from the Altium library and enable faster time to market.