Altium receives A$68.50 cash offer from Tokyo-based semiconductor solutions supplier

About Altium Limited

Altium Limited (Altium or the Company) was founded in 1985 as one of the world’s first Printed-Circuit Board design tool providers and today is a multinational electronic design software corporation with offices all over the world. The Company is focused on electronics design systems that enable users to collaboratively connect with every aspect of Printed Circuit Board (PCB) design activities and related system development processes. PCBs are fundamental to the design and functionality of electronics and smart connected electronic products. The Company’s market-leading PCB design tool is used by 183,000 engineers and commercial designers and by more than 38,000 companies worldwide.

A$68.50 cash offer for 100 percent of Altium

Tokyo-based supplier of advanced semiconductor solutions, Renesas Electronics Corporation (Renesas), has made a A$68.50 cash offer for 100 percent of the outstanding shares in Altium Limited. The offer price is a 31 percent premium to Altium’s all-time high closing share price of $52.34 per share on 12 February 2024 and is a generous 50 times Enterprise Value / FY24 estimated EBITDA. Unsurprisingly the Altium Board have unanimously recommended that shareholders accept the offer.

Key Offer Terms

The Offer Terms are embodied in a Scheme Implementation Agreement (SIA) for Renesas to acquire Altium by a Scheme of Arrangement (Scheme) under Australian law. The Scheme is subject to approval by Altium shareholders at the Scheme meeting, which will follow after shareholders have received a Scheme Booklet that includes an Independent Expert’s report. Approval by the Federal Court and the Foreign Investment Review Board and no material adverse change in Altium are the only other terms to be satisfied for the transaction to close.

The transaction is not conditional on Renesas obtaining funding or financing and nor is it subject to due diligence. Aram Mirkazemi will remain CEO of Altium which will become a wholly owned subsidiary of Renesas and the business operations of Altium will be run at arm’s length with support functions to be integrated.

Altium has certain rights to pay dividends under the SIA. An interim dividend for the half-year ending 31 December 2023 remains at the discretion of the Altium Board. If paid, it will not be deducted from the Scheme Consideration. Any additional dividends, beyond any interim dividend, will be deducted from the Scheme Consideration. Accordingly, Altium shareholders can expect to receive an interim dividend in addition to the A$68.50 cash offer.

Transaction Rationale

Both companies are industry leaders and recognise the benefit of an integrated electronics system design and life cycle management platform that unifies design steps including component selection, evaluation to simulation, and PCB physical design. Technology continues to advance rapidly making the design and integration of electronic systems increasingly complex and involving multiple stakeholders and design steps. Engineers must be able to design systems that are not only functional but also efficient and cost-effective under shortened development cycles.

Renesas are also attracted to Altium given its sophisticated cloud platform capabilities that enable integration with third party vendors to execute all electronic design steps seamlessly on the cloud. This will drive higher design productivity that enables faster innovation and lowers barriers to entry for system designers by reducing development resources and inefficiencies.

According to Renesas, the Altium acquisition is immediately accretive to earnings without synergies. Furthermore, Altium’s impressive key financial metrics appeal to Renesas, including a 36.5 percent EBITDA margin on US$263 million of revenue, of which 77 percent is recurrent revenue.

The proposal put forward by Renesas is compelling for Altium investors. The Altium Board and management have carefully evaluated the Offer Consideration against the Company’s medium and long-term growth prospects and market opportunities. The Board have unanimously formed the view that the proposal represents attractive and certain value for Altium shareholders.

What’s Next?

The next critical step is preparation and distribution of the Scheme Booklet that will be sent to Altium shareholders once the timing of all regulatory approvals is clear.

Altium and Renesas have worked closely together as partners for nearly two years. This is a well-planned transaction by both parties that is highly likely to close during the second half of calendar year 2024 and certainly well before year-end, once the Court and final regulatory approvals have been obtained.