Renesas Announces Issuance of New Shares and Secondary Offering of Shares

TOKYO, Japan ― Renesas Electronics Corporation (“Renesas”, TSE: 6723,) today announced that it has resolved, at the Board of Directors’ meeting held today, matters relating to an issuance of new shares and a secondary offering of shares of stock of Renesas as set forth below.

[Purpose of the Funding and the Secondary Offering of Shares]

In order to achieve further growth, Renesas has been striving to expand and strengthen its product portfolio and necessary technologies through both organic (expanding and strengthening existing businesses) and inorganic (utilizing strategic alliances with other companies, acquisitions, etc.) approaches.

To further accelerate these consistent growth strategies, in February 2021, Renesas and Dialog Semiconductor Plc (CEO: Jalal Bagherli; “Dialog”), a UK.-headquartered analog semiconductor supplier, reached an agreement on the acquisition by Renesas of the entire issued and to be issued share capital of Dialog (the “Acquisition”, announced on February 8, 2021 as the press release titled “Agreement on Commencement of Acquisition Procedure to Make Dialog Semiconductor Plc a Wholly-owned Subsidiary”), the total value of which is approximately EUR 4.9 billion (approximately 615.7 billion yen).

The board of directors of Renesas unanimously approved the Acquisition. In addition, the board of directors of Dialog unanimously recommended the Dialog shareholders accept the offer. The Acquisition was also approved and resolved by the Dialog shareholders at the Dialog general meeting and the court meeting by the requisite majorities on April 9, 2021. The Acquisition is expected to close by the end of calendar year 2021, subject to, among other things, the sanction by the UK court and regulatory approvals from the relevant countries.

The proceeds from the issuance of new shares will be used in full to fund a part of the purchase price for the Acquisition. The issuance of new shares and the Acquisition will enable Renesas to maintain a strong financial base that will enable Renesas to execute its future growth strategy, while acquiring Dialog’s technology assets in analog semiconductors.

In addition, the secondary offering of shares of Renesas will be conducted by INCJ, Ltd. concurrently with the issuance of new shares through the Japanese Public Offering and the International Offering (each as defined below).

1. Issuance of new shares through the Japanese Public Offering and the International Offering

2. Secondary offering of shares of Renesas (Japanese Secondary Offering by way of Underwriting and Purchase and International Secondary Offering)

3. Secondary offering of shares of Renesas (secondary offering by way of over-allotment) (See <Reference> 1. below.)

4. Issuance of new shares by way of third-party allotment (See 1. of <Reference> below.)

<Reference>

1. Secondary offering by way of over-allotment

The secondary offering by way of over-allotment as explained in “3. Secondary offering of shares of Renesas (secondary offering by way of over-allotment)” above is a secondary offering by the designated Japanese underwriter of shares of common stock of Renesas in Japan to be conducted in connection with the Japanese Public Offering as stated in “1. Issuance of new shares through the Japanese Public Offering and the International Offering” and the Japanese Secondary Offering by way of Underwriting and Purchase as stated in “2. Secondary offering of shares of Renesas (Japanese Secondary Offering by way of Underwriting and Purchase and International Secondary Offering)” above, taking into account market demand and other conditions, with up to 6,731,300 shares of common stock of Renesas borrowed from the shareholder of Renesas (the “Borrowed Shares”). The number of shares to be sold in the secondary offering by way of over-allotment is the maximum number thereof, and such number may decrease or the secondary offering by way of over-allotment may be cancelled entirely, depending on market demand and other conditions.

In connection with the secondary offering by way of over-allotment, Renesas has resolved, at the Board of Directors’ meeting held on May 28, 2021, an issuance of 3,637,300 shares of its common stock to the designated Japanese underwriter by way of third-party allotment (the “Third-Party Allotment”), with the payment date set to be June 28, 2021.

Furthermore, in connection with the secondary offering by way of over-allotment, the designated Japanese underwriter will be granted by the aforementioned shareholder of Renesas, the right to purchase additional shares of common stock of Renesas (the “Green Shoe Option”), up to 3,094,000 shares, during an exercise period from the delivery date of the Japanese Public Offering and the International Offering, together with the Japanese Secondary Offering by way of Underwriting and Purchase and the International Secondary Offering and the secondary offering by way of over-allotment (collectively referred to as the “Global Offering.”) to June 23, 2021.

The designated Japanese underwriter may, during the subscription period for the Japanese Public Offering, the Japanese Secondary Offering by way of Underwriting and Purchase and the secondary offering by way of over-allotment (the “Subscription Period”), conduct stabilizing transactions in relation to the shares of common stock of Renesas, and the shares purchased through such stabilizing transactions may be used, in whole or in part, to return the Borrowed Shares.

The designated Japanese underwriter may also purchase shares of common stock of Renesas on the Tokyo Stock Exchange, Inc., up to the number of shares in the secondary offering by way of over-allotment (the “Syndicate Cover Transactions”) during the period from (a) the day immediately following the last day of the Subscription Period to (b) June 23, 2021 (the “Syndicate Cover Transaction Period”), and all of the shares purchased through the Syndicate Cover Transactions will be used to return the Borrowed Shares. During the Syndicate Cover Transaction Period, the designated Japanese underwriter may cancel the Syndicate Cover Transactions entirely or may terminate the Syndicate Cover Transactions before the number of shares purchased reaches the number of shares to be sold in the secondary offering by way of over-allotment, in its own discretion.

With respect to the number of shares obtained by deducting (i) the number of shares to be purchased through stabilizing transactions and the Syndicate Cover Transactions, which will be used to return the Borrowed Shares from (ii) the number of shares for the secondary offering by way of over-allotment, the designated Japanese underwriter will exercise the Green Shoe Option and apply for subscription for the shares to be allotted by way of the Third-Party Allotment, in proportion to the ratio of the number of shares under the Japanese Public Offering to the number of shares under the Japanese Secondary Offering by way of Underwriting and Purchase.

Accordingly, all or a part of the shares of common stock of Renesas to be issued through the Third-Party Allotment may not be subscribed for, which may result in a decrease in the determined number of shares to be issued through the Third-Party Allotment, or in the cancellation of the entire issuance, due to forfeiture of the right to subscribe.

Whether the secondary offering by way of over-allotment is conducted or not and how many shares are sold in the secondary offering by way of over-allotment will be determined on the Determination Date. In cases where the secondary offering by way of over-allotment is not conducted, the designated Japanese underwriter will not borrow shares of common stock of Renesas from the above shareholder, the Green Shoe Option will not be granted by such shareholder, and the Syndicate Cover Transactions on the Tokyo Stock Exchange, Inc. will not be conducted. In such case, as the designated Japanese underwriter will not apply for subscription for the Third-Party Allotment, the issuance of the shares of common stock of Renesas through the Third-Party Allotment will be entirely cancelled, due to forfeiture of the right to subscribe.

The transactions stated above will be made by the designated Japanese underwriter after consultation with the joint lead managers of the Japanese Public Offering and the Japanese Secondary Offering by way of Underwriting and Purchase.

2. Total number of issued shares before and after the issuance of new shares through the Japanese Public Offering and the International Offering and the issuance of new shares by way of the Third-Party Allotment

(Notes)

1. As Renesas has issued stock acquisition rights, “Current total number of issued shares” refers to the total number of issued shares as of April 30, 2021.
2. The numbers of shares are based on the assumption that the option set forth in (1)(iii) of “1. Issuance of new shares through the Japanese Public Offering and the International Offering” above is exercised in full by the international managers.
3. The numbers of shares are based on the assumption that the maximum number of the offered shares set forth in “4. Issuance of new shares by way of third-party allotment” (1) above are subscribed for by the designated Japanese underwriter and are issued.

3. Use of proceeds

(1) Use of proceeds to be raised through the offerings

In February 2021, Renesas reached an agreement with Dialog to acquire the entire issued and to be issued share capital of Dialog and thereby make Dialog a wholly owned subsidiary of Renesas (the Acquisition). The Acquisition consideration of the entire issued and to be issued share capital of Dialog totals approximately EUR 4,886 million (approximately 615.7 billion yen based on the exchange rate as of February 3, 2021 of 126 yen per Euro). Renesas executed a Facilities Agreement with MUFG Bank, Ltd. and Mizuho Bank, Ltd., (borrowing limit: 735.4 billion yen) to procure necessary funds for the Acquisition. The fundraising through the issuance of new shares is intended to convert a part of funds to be obtained through such Facilities Agreement to long-term funds. Accordingly, Renesas intends to use the aggregate maximum amount of proceeds of 218,511,846,995 yen to be obtained from the Japanese Public Offering, the International Offering and the Third-Party Allotment to fund a part of the purchase price for the Acquisition. In this case, Renesas will not borrow the equivalent amount through the Facilities Agreement. The Acquisition is expected to close by the end of calendar year 2021.

However, if any of the Japanese Public Offering, the International Offering and the Third-Party Allotment are consummated after the payment date of the purchase price for the Acquisition, the proceeds from such delayed financing will be used to repay a part of borrowings under the Facilities Agreement that Renesas procures for payment of the purchase price for the Acquisition.

Although, the Acquisition is expected to close by the end of calendar year 2021 as noted above, the closing of the Acquisition is subject to, among other things, the sanction by the UK court and regulatory approvals from the relevant countries; therefore, the Acquisition may not be consummated if any or all of these conditions are not met.

In the event that the Acquisition is not consummated, the proceeds will be used in whole or in part for repayments of existing borrowings, investments in the businesses, capital expenditure or working capital.

In either case, the proceeds will be managed in a bank account until actual expenditure.

(2) Change in use of proceeds raised previously

Not applicable.

(3) Expected impact on operating performance

Renesas believes that the Acquisition of Dialog through this funding will enable Renesas to maintain a strong financial base, allowing Renesas to execute its future growth strategy, and that acquiring Dialog’s technology assets in analog semiconductors will contribute to revenue growth in the mid- to long-term.

4. Lock-up

In connection with the Global Offering, INCJ, Ltd., which is the seller in the secondary offering, will agree with the joint global coordinators not to conduct a sale, etc. of the shares of Renesas, securities convertible or exchangeable for shares of Renesas, or securities that represent rights to acquire or receive shares of Renesas (excluding the Japanese Secondary Offering by way of Underwriting and Purchase and the International Secondary Offering, etc.), for a period commencing on the Determination Date and ending on the date 180 calendar days from and including the delivery date of the Global Offering, without the prior written consent of the joint global coordinators (which consent shall not be unreasonably withheld or delayed).

Renesas will also agree with the joint global coordinators not to conduct an issuance, etc. of the shares of Renesas, securities convertible or exchangeable for shares of Renesas, or securities that represent rights to acquire or receive shares of Renesas (excluding the Japanese Public Offering, the International Offering, the Third-Party Allotment, the issuance of new shares in relation to a stock split, the issuance of new shares upon the exercise of certain stock acquisition rights, and the grant of restricted stock units and performance share units under the stock compensation plan where shares are delivered after vesting and the issuance of new shares in relation to such units, etc.), for a period commencing on the Determination Date and ending on the date 180 calendar days from and including the delivery date of the Global Offering, without the prior written consent of the joint global coordinators.

In either of the aforementioned cases, the joint global coordinators have the authority to wholly or partially cancel the relevant agreements at their discretion.

About Renesas Electronics Corporation

Renesas Electronics Corporation (TSE: 6723) delivers trusted embedded design innovation with complete semiconductor solutions that enable billions of connected, intelligent devices to enhance the way people work and live. A global leader in microcontrollers, analog, power and SoC products, Renesas provides comprehensive solutions for a broad range of automotive, industrial, infrastructure, and IoT applications that help shape a limitless future. Learn more at renesas.com. Follow us on LinkedIn, Facebook, Twitter, and YouTube.

(Remarks) All names of products or services mentioned in this press release are trademarks or registered trademarks of their respective owners.

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