The Disruptors

TGCC
RENESAS M&A
Central &
South America
Executive Summary

DIAGNOSIS Why isn’t RENESAS living up to its full potential?

What market and company can bring out the best in

TARGET RENESAS?

How are the two companies connected and what

SYNERGIES benefits does the acquisition bring?

What are the main risks incurred through the

RISKS acquisition of the targeted company?

What are our plans and prospects after the acquisition is

NEXT STEPS completed?

Renesas’ performance has consistently stayed below peers

Lackluster Growth Issues

RENESAS has lagged behind its competitors and RENESAS’ current situation can be funneled
hasn’t accompanied the market. Even with the towards one main issue: relying excessively on
help of recent acquisitions and investments, the MCUs, semiconductors & hardware solutions
company is not fulfilling its potential

31% revenue decrease

LACK OF GROWTH in comparison to 2011

UNSTABLE BUSINESS 15% σ stdev in YoY

revenue
LOW MARGINS 0,9% operating margin in
2019

Operations in six factories

HIGH FIXED COSTS
MCUs, semiconductors,
HARDWARE
SoCs, and devices
INTENSIVE
RENSAS, NASDAQ & NXP pricing comparison - Financial Times
The MCU market is filled with hardships…

Low Profit Margins Value Chain Disruption

Fierce competition, reduced
Semiconductor companies have

margins (commodities) and

uncovered more value from

short-term profits lost in future

integration, software and services

products that don’t take off. than from the sale of chips.

Cyclical Demand Supply Issues The peak has been

C
onsumer-oriented Issues with the
reached
markets, (automotive and
supply-chain can lead to
Performance of

industrial) generate market crashes or extreme

semiconductors and MCUs
instability in revenues. volatility during demand
tend to level out as Moore’s
surges. law becomes outdated.
… while the IoT sector has outstanding potential
HIGHER MARGINS
MCUs
IoT,
61,8%
Infrastructure
Automotive 43,8
Soft Other
IoT %
war
e RENESAS 2021 Gross Margins per sector
13,7%
IoT market predicted revenue 2021-2030
Renesas sees the

END-TO-END potential, but lacks the

GROWTH SOLUTIONS resources to transition

The global IoT market revenue is The IoT market is fragmented across “We’re moving away from mastering

projected to grow from $440.30 many areas RENESAS can capture a individual devices. Instead, we’re

billion in 2021 to $1,811.01 billion greater portion of the IoT market by investing more in software
in 2028 at a CAGR of 22.4% providing complete solutions to its development tools and ecosystem

customers with the help of enrichment”

acquisitions. - Hidetoshi Shibata, RENESAS CEO
Silicon Labs is a suitable target for an acquisition,
especially in comparison to its peers

IoT

Software Hardware ESG

ready

Integrated hardware

and software IoT

solutions

7.8B+ market cap

59% gross margin

12.03% CAGR

Fabless

35,000+ customers
Silicon Labs deploys a concise corporate strategy,

Proposal Mission Values

Provide software, silicon Empower developers to create Foster and employ great talents
semiconductors, and solutions wirelessly connected devices in order to generate customer
for IoT ecosystems & wireless that transform industries, grow value, meet commitments, and
protocols. economies and improve lives. work towards ESG.

Governance Wireless Development

Partners
Managers and directors with
Platform
expertise in the semiconductor, Google
software and IoT sectors. Integrated hardware, software and
The company’s culture emphasizes development tools to help clients
innovative risk taking and diversity. quickly create secure, intelligent
devices.
There is around $4B worth of synergies*, figures in US Dollars

Revenue synergies Cost synergies

Cross selling MCUs, integrated 2.1% of
Prod. costs Hardware production (e.g. 8 &
3% of combined

devices, combined
32-bit MCUs) COGS = $795

software... revenue =
million
$970 million

Not R&D Reduction on one of the

7% of combined
Client base
Acquisition of SLABS’
highest investments of both
R&D = $131
diversification current clients quantified companies million

Winning combinations, Not

G&A Reduction of personnel 2,5% of
Lifetime value New customer quantified
combined G&A =
acquisition $422 million

Patents and Silicon Labs has over 1,770 Not quantified

Financing synergies Goodwill patents issued or pending
Added debt Ability to incur higher
According to
capacity debt SLABS report: Increased
Factories, transportation,
Not quantified
$1.5 billion utilisation of
offices, machines, processors.

capital assets
Tax Benefits Unused tax losses,
15% of
surplus funds, and the
combined
write-up of depreciable
taxes = $175 * Total synergy value was calculated by bringing 20 years of
assets million calculated synergies to Net Present Value
The $9 billion deal should be completed as a leveraged
buyout, given the historically low interest rates ( 1.79 % )

Debt Schedule 32,3%

32,4 %

% KindRate Premium
premiu

m
Average value paid

$31.4B
Bank
86 on comparable

loans1.375
transactions

(2016-2021)
08 Bonds1.720
Combined value of both

companies and

06 Equity 7.843 synergies

Overpaying is a major Risk as Premium reaches historical
highs, 32,3 %, effects are exacerbated in a leveraged operation
Risk Matrix
Loss Premium may be too high given current
market conditions, M&A and SPAC boom.
Taiwan Financing
Overpaying
High Invasio obstacles
n
Geopolitics may severely disrupt supply

chains and jeopardize our market outreach,

Due
The Taiwan Strait is particularly concerning.
Regulatory
Integration
Diligence
Medium issues shortfalls.
failures

There may be a clash of culture and fit as

Low
Emerging

Hostile integration between both firms take

Low consumer
competitors place
adherence Takeover

Improbable Possible Probable

Probability
Renesas should strive for a quick integration

Roadmap
Leveraged
Raise the percentage

Rebound period after Buyout (LBO of RENESAS IoT

Dialog integration revenue to 70%

1 3 5

2 4 6

Due Diligence on
Issue Bonds
Integrate
Silicon Labs
Thank you !
Appendix

Notable Acquisitions by Renesas Electronics

Timely Disclosure_Rensas Electronics Corporation
Renesas financial reports
Silicon labs financial reports
Renesas CEO warns of tight chip supply through mid-2022
Renesas Electronics: Low ROIC And Rising Capex Put Us On The Sidelines (OTCMKTS:RNECF)
Hidetoshi Shibata of Renesas on leadership through difficult times
Notice Regarding the Semiconductor Manufacturing Factory (Naka Factory) Fire (Summary of Updates)

Internet of Things Insights

A Semiconductor Ecosystem | TMT Predictions 2020
IoT opportunity in the world of semiconductor companies
The Cloud Is Changing Semiconductor Industry – #chetanpatil – Chetan Arvind Patil
Growing opportunities in the Internet of Things
• Semiconductor market size 2022
Internet of Things [IoT] Market Size, Trends & Analysis, 2028
Target companies
https://www.particle.io/
https://karambasecurity.com/
https://airhopcomm-web.com/
https://www.semtech.com/
https://icemostech.com/

https://www.samsara.com/pdf/docs/samsara-for-fleets-presentation.pdf

Competitors
https://www.nxp.com/

https://www.intel.com/content/www/us/en/download-center/home.html

https://www.qualcomm.com/
https://www.ti.com/