Farewell Altium: Everything you need to know about the $9 billion takeover bid

Fri 16 Feb 24, 11:45am (AEST)
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Key Points

  • Altium's board unanimously recommends $9.1 billion takeover offer by Renesas, representing substantial premiums and high likelihood of approval
  • Renesas aims to integrate design and lifecycle management, with analysts foreseeing immediate earnings benefits and innovation from Altium takeover
  • Companies that could replace Altium in the ASX 200 include Stanmore Resources, Siteminder and Audinate

The acronym WAAAX (Wisetech, Afterpay, Altium, Appen and Xero) emerged a few years ago, to represent our best and brightest tech stocks. Fast forward to today, the acronym has dwindled to just two letters – WX.

Afterpay was acquired by Block in early 2022, Appen has spiralled down to micro-cap status, and now, Altium is about to be taken out by Japanese chipmaker Renesas for $9.1 billion.

"Almost certain to take place"

Altium's board of directors unanimously recommended shareholders to accept the $68.50 cash per share takeover offer.

The offer represents a 33.6% premium to its price prior to the date of the announcement, a 39% premium to its one-month volume-weighted average price and 31% higher than its all-time high closing price on February 12.

"The acquisition looks almost certain to take place. The transaction has been unanimously approved by the board of directors of both companies," Morningstar analysts said in a note on Friday.

"Altium's board members intend to vote in favour of the acquisition, unless a superior proposal is made, or the independent expert concludes that the SIA is not in the best interests of Altium shareholders."

Its worth noting that the takeover remains subject to several outstanding conditions including:

  • Altium shareholder approval

  • Regulatory approvals from the Australian Foreign Investment Review Board and Committee of Foreign Investment in the US

  • Independent expert concluding the takeover is in the best interest of Altium shareholders

  • No material changes to the Altium business and/or prescribed events

"With the transaction, Renesas ... aims to bring together design and lifecycle management for electronics. The takeover follows an unsuccessful attempt by wide-moat Autodesk, a global design software company, to acquire Altium in 2021 for a reported $40.0 per share," the analysts said.

The transaction is expected to close in the second half of 2024.

Quick Takes

I've combined some key takeaways from brokers including Goldman Sachs, RBC Capital Markets and more.

  • Likelihood of offer falling through: This is extremely unlikely as Renensas has a solid balance sheet and plans to finance the takeover via bank loans and cash reserves

  • Competing bids: The analysts widely believe that a competing bid is unlikely given the sizeable premium being paid

  • Renesas intentions: The partnership between the companies initiated in 2023, aimed at re-platforming Renesas' design teams onto Altium. Analysts believe the takeover will be immediately accretive to Renesas earnings and foster further electronics design innovation and collaboration.

Which company will replace Altium?

Costa Group (ASX: CGC) was removed from the ASX 200 (as the company will be acquired by Paine Schwartz) on 9 February and replaced by Strike Energy (ASX: STX).

In the lead up to Costa's removal, Morgan Stanley shortlisted five potential candidates:

  1. Stanmore Resources (ASX: SMR)

  2. Strike Energy (ASX: STX)

  3. Siteminder (ASX: SDR)

  4. Audinate (ASX: AD8)

  5. McMillan Shakespeare (ASX: MMS)

Stanmore was the highest ranked based on "a 6-month float-adjusted market capitalisation of $1.3 billion," the analysts said.

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Written By

Kerry Sun

Content Strategist

Kerry holds a Bachelor of Commerce from Monash University. He is an avid swing trader, focused on technical set ups and breakouts. Outside of writing and trading, Kerry is a big UFC fan, loves poker and training Muay Thai. Connect via LinkedIn or email.

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