Synaptics buying Renesas unit, ups guidance; Himax lower

Synaptics (SYNA) is acquiring Renesas' (RNECF) LCD driver IC unit in full for $475M in cash, or an enterprise value of $515M. Past reports had Synaptics only initially buying Renesas' 55% stake in the business.

The deal is expected to close in calendar Q4, be financed with a combo of cash and $300M in debt financing, and be immediately accretive to EPS. It adds to a broader consolidation wave that has hit the semi industry over the last year.

The Renesas unit (#1 in the mobile LCD driver market) had revenue of $650M and cash flow of $100M in the fiscal year ending in March - that means Synaptics is paying only 0.8x trailing sales. Synapitcs (current market cap of $2.4B) predicts the purchase will grow its addressable market by 1.5x, and "accelerate its product roadmap for touch-and-display driver integration."

Separately, Synaptics is hiking its FQ4 revenue guidance to $300M-$310M, above a prior $275M-$295M and a $285.8M consensus. The touchpad/touch controller vendor says both mobile and PC demand has been better than expected.

Synaptics is halted. Renesas rival Himax (HIMX) -2.3% AH.

Previous: Analyst commentary on Synaptics/Renesas

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Comments (3)
  • Philip Marlowe
    , contributor
    Comments (1597) | Send Message
    As a SYNA holder, I am ecstatic! First of all the revenue guidance hike is great news. This hike comes on top of a previous revenue guidance which was already well above consensus. (*) And now they are guiding even higher than that already surprisingly high guidance. Like SWKS before them, they are piling a beat on top of a beat. Note that this revenue guidance does not include any contribution from Renesas. There is no doubt SYNA is red hot.


    Secondly they got Renesas for a steal. They paid less than one times revenue and less than five times cashflow. SYNA itself trades for almost three times revenue!


    Third it seems that Renesas is profitable and will contribute to EPS immediately.


    Fourth, this is a great strategic acquisition for the long term. Eventually the LCD driver chip will merge with the touch sensor chip. Combining the best LCD driver technology with the best touch sensor technology, SYNA will have a technology edge for many years in the future.


    (*) This is what SA had to say about it: "Synaptics (SYNA) expects FQ4 revenue of $275M-$295M, well above a $231.3M consensus."
    10 Jun 2014, 04:37 PM Reply Like
  • Bullmarketcall
    , contributor
    Comments (2102) | Send Message
    This could only affect HIMX in one way > MKT is still potentialy vast for growth.
    Both are competitors, RV guidance strong than expecetd could poise HIMX to some new rally too.
    10 Jun 2014, 06:08 PM Reply Like
  • 808Amigo
    , contributor
    Comments (484) | Send Message
    HIMX after hours price was just $0.01 below 4PM close when after hours closed at 8PM.
    11 Jun 2014, 12:05 AM Reply Like
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