February 28, 2024 | Technology | Asia | Active

Altium / Renesas: Deal Insight

On 15-Feb-24, Japanese chipmaker Renesas Electronics (“Renesas”) announced a firm agreement to acquire Australian electronic design automation (EDA) company Altium for AUD 9.1bn, or AUD 68.50 cash per share. The offer consideration represents a 33.6% one-day takeover premium, and the boards of both companies unanimously approved the deal. Through effectiveness, Altium is permitted to pay an interim dividend for its half-year ending 31-Dec-23. The dividend amount remains at the discretion of the board, but it is capped “up to an amount agreed” between the merger parties; on 26-Feb-24, Altium confirmed that it raised and will pay an AUD 0.30 dividend for its fiscal 1H’24, and this will trade ex- on 4-Mar-24, with a record date of 5-Mar-24. The M&A announcement confirms that Altium’s interim dividend “will not be deducted from the scheme consideration” but that any additional distributions beyond this will be subject to a corresponding deduction. Structured as an Australian scheme of arrangement, the deal is subject to competition clearances from the US, Germany, and Turkey, as well as clearances from the Australian Foreign Investment Review Board (FIRB), CFIUS, and the German Ministry for FDI. Furthermore, approval from Altium shareholders is needed: 50% of shareholders present and voting (headcount test) and 75% of votes cast. Most notably, neither SAMR antitrust nor Renesas shareholder approval are required. Altium’s board unanimously recommends its shareholders approve the scheme, contingent upon an independent expert concluding that the deal is in the best interest of the shareholders. All directors of Altium, holding 10.4%, intend to vote in favour of the deal. Following the acquisition, Altium will continue to be led by its current CEO, Aram Mirkazemi, and will operate as a wholly-owned subsidiary of Renesas. The scheme implementation agreement includes customary provisions such as “no shop,” “no talk,” and “no due diligence” clauses, alongside customary fiduciary-out exceptions, as well as matching rights to Renesas. This is interesting, particularly since Autodesk (ADSK US) proposed to acquire the company in 2021. The MAC is defined to encompass any event that is “reasonably likely” to result in Altium’s underlying EBITDA declining by at least 25% compared to what it reported for FY’23 (Reported EBITDA for 2023 was $96.0m, hence $72.0m). According to the SIA, Renesas is solely responsible for securing FIRB approval and must ...

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