Apple chip supplier Dialog is being bought for nearly $6 billion by Japanese giant Renesas Electronics

• Renesas, one of the world's largest auto chip makers, is buying Apple supplier Dialog for $5.9 billion.
• Renesas said it would issue up to $2.6 billion in new shares to help fund the deal.
• Dialog shares traded 16% higher in Frankfurt on Monday. Renesas fell as much as 6.9%.

Japanese chipmaker Renesas Electronics Corp has agreed to buy Dialog Semiconductor, an Apple supplier, for 4.9 billion euros ($5.9 billion) in cash.

Renesas, one of the world's biggest auto chip makers, has offered 67.50 euros a share for Dialog, representing a 20% premium to Friday's closing price and a 52% premium to a weighted three-month average. Dialog is listed in Frankfurt and headquartered in the UK.

"The transaction we announced today represents our next important step in catapulting Renesas' growth plan," Hidetoshi Shibata, President and CEO of Renesas, said of the latest in a string of acquisitions in recent years.

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Dialog, which specialises in power-management chips and low-energy Bluetooth products used in fitness trackers and cordless earphones, said the agreed deal represented a "compelling opportunity" for its shareholders. Its board of directors would unanimously recommend the offer, it said.

Dialog shares traded 16% higher in Frankfurt at 65.30 euros, just shy of the agreed sale price. The Anglo-German chip designer confirmed on Sunday that it had received an offer from Renesas in response to news reports it was a takeover target.

The deal comes after Renesas and Dialog agreed in August to cooperate in automotive computing platforms, while a global shortage of semiconductors has forced some car makers to curb production.

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It also follows a series of acquisitions by Renesas in recent years, underpinned by its quest to increase its share of analogue chips used to process signals for things such as sound, light, and temperature.

Renesas, which has a market share of around 30% for microcontrollers used in cars, bought US chip design firm Integrated Device Technology Inc in 2018 for $6.7 billion following the $3.2 billion purchase of US chipmaker Intersil in 2017.

Renesas said it would issue up to 270 billion yen ($2.6 billion) in new shares to help fund the deal.

It anticipated incremental revenue growth from the deal of approximately $200 million in four to five years after the deal closed, while cost savings of $125 million would materialise over three years, it said.

Shares in Renesas fell as much as 6.9% on Monday before closing down 3.6%, lagging a 2.1% gain in the broader market.