Intersil Corp (NASDAQ:ISIL) stock jumped on Tuesday following news that it will be acquired by semiconductor company Renesas.
The deal will have Renesas paying $3.2 billion for Intersil, which deals in power management and precision analog solutions. This will have it paying $22.50 in cash for each ISIL share. That is a 43.9% premium over the stock’s closing price on Aug. 19, 2016.
Renesas will be using cash on hand to fund the acquisition of Intersil. It is expecting the deal to immediately increase its gross and operating margins once it is completed, as well as being accretive to its earnings per share.
Renesas will also benefit from synergies with Intersil. It is looking for eventual synergies of $170 million after acquiring the company. The analog devices market that the company serves is also expected to increase by $3.9 billion by 2020.
With help from Intersil’s power management and precision analog solutions, Renesas is looking to be a top provider for various areas. This includes the “automotive, industrial, cloud computing, healthcare, and the Internet of Things” markets.
BofA Merrill Lynch and Morgan Stanley served as financial advisors to Renesas. Morrison Foerster provided legal advice and McKinsey & Company offered strategic advice. Intersil got its financial advice from JP Morgan, legal advice from Jones Day and Covington & Burling, and strategic advice from Foros Group.
The deal between Intersil and Renesas has been approved by both companies’ Board of Directors. Now it’s just waiting on approval from ISIL shareholders and regulators. If it gets approval, the deal is expected to close during the first half of 2017.
ISIL stock was up 10% as of Tuesday morning.
