UPDATE 5-Japan chipmaker Renesas to buy software firm Altium for $5.9 bln

(Recasts; adds Renesas, Japan M&A activity plus context throughout)

By Sam Nussey

TOKYO, Feb 15 (Reuters) - Japan's Renesas Electronics on Thursday said it would buy electronics design firm Altium for $5.9 billion in cash, as the acquisitive automotive chipmaker looks to offer digital device design to customers.

The acquisition places Renesas at the forefront of dealmaking and investment in Japan's chips industry, with the government making efforts to improve competitiveness and boost supply chain resilience against geopolitical shocks.

Renesas, which manufactures chips for automakers such as Toyota and Nissan, aims to provide device design through the purchase of Altium, which offers digital tools for engineers and designers devising circuit boards.

"As long as we remain a traditional device manufacturer we will only be marginalised," Renesas CEO Hidetoshi Shibata said at a news conference.

Renesas has offered A$68.50 per Altium share, 34% more than the stock's Wednesday closing price, and said it will finance the purchase with cash on hand and bank loans.

Altium is headquartered in the United States and listed in Australia. It booked sales of $263 million in the year ended June with an earnings before interest, tax, depreciation and amortisation margin of 36.5%.

"This is going to help us execute at a faster pace," Altium CEO Aram Mirkazemi told the news conference.

The deal has been approved by both companies' boards of directors but requires approval from Altium shareholders, an Australian court and regulators, Renesas said. It expects the deal to close in the second half of the year.

Renesas' share price fell as much as 4.9% after the announcement before paring losses to trade down around 1.3% at 2,568 yen in the afternoon session. Altium shares, which this year had risen 9.4% as at the last close, jumped 28% to A$65.83.

"They don't seem to be overpaying," said chief strategist Tatsunori Kawai at au Kabucom Securities.

"But the fact (market) players are not reacting positively also means they are still unconvinced about how this deal would contribute to the company's long-term growth."

Altium said its board recommended the deal in the absence of a superior offer and subject to an independent expert concluding it was in the best interests of its shareholders.

"It's a strong endorsement of Altium's strategy and its performance," said Mirkazemi.

Altium rejected a $3.9 billion takeover bid in 2021 from software company Autodesk as too low. Autodesk later ended talks.

"Given unanimous support from the board, as well as the large premium to prior close, we would expect the transaction to be supported and go through," analyst Paul Mason at E&P Capital wrote in a client note.

JAPAN DEALMAKING

Japan was the only major Asian market to see growth in outbound merger-and-acquisition deals in 2023, with a 71% jump from the year earlier to $56 billion, showed LSEG data in late December. Its outbound deals peaked in 2018 at $178 billion.

In recent weeks, Nippon Steel announced a $14.9 billion deal for U.S. Steel while homebuilder Sekisui House sealed a $4.95 billion deal for U.S. builder MDC Holdings, as Japanese companies develop revenue streams overseas to offset deteriorating demographics domestically.

Renesas itself was created in 2010 through a merger of NEC's chip division and Renesas Technology, which in turn was established through a merger of the chip operations of Hitachi and Mitsubishi Electric.

The struggling company achieved a turnaround under a government-backed fund - which later sold down its stake - after closing plants and laying off workers.

It then went on an overseas spending spree with a $3.2 billion deal for chipmaker Intersil in 2016 and $6.7 billion purchase of peer Integrated Device Technology announced in 2018.

Last month, the chipmaker said it would buy U.S. power semiconductor company Transphorm Technology for $339 million as it looks to build its business in gallium nitride chips used in electric vehicles.

($1 = 1.5406 Australian dollars) (Reporting by Sam Nussey; Additional reporting by Kantaro Komiya, Mariko Katsumura, Archishma Iyer, Makiko Yamazaki and Kane Wu; Editing by Jamie Freed and Christopher Cushing)