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Altium (ASX:ALU) share price soars on huge takeover deal

The Altium Limited (ASX: ALU) share price is rocketing after accepting a takeover deal from Renesas Electronics Corp.

Altium’s core offering is electronic PCB design software. It has a number of other offerings, including the electrical part search engine Octopart.

Takeover accepted for Altium shares

Altium and Tokyo-based Renesas Electronics have entered into a takeover agreement. Renesas is a supplier of advanced semiconductor solutions and is proposing to buy 100% of Altium shares.

Under the proposal, Altium shareholders will receive A$68.50 per share in cash.

The Altium share price reached an all-time high on 12 February 2024 – the offer is a 31% premium to that peak.

The offer puts a $9.1 billion value on Altium, representing an enterprise value to EBITDA valuation ratio of 50x.

Altium’s board has decided to accept the offer and recommend that shareholders vote in favour of the takeover, in the absence of a superior proposal and subject to an independent expert concluding that the scheme is in the best interests of shareholders.

It’s not a done deal, with the offer still subject to a number of conditions, including approval by Altium shareholders at a meeting.

Altium has “certain rights” to pay dividends under the takeover offer. An interim dividend for HY24 remains up to the Altium board to decide. Any additional dividends, beyond the interim dividend, will be deducted from the offer.

Why did the board decide to accept?

The board believes Renesas holds a “shared vision to build a seamless and open electronics system design and lifecycle management platform, which will utilise Altium’s market-leading design software and cloud platform capabilities.”

After comparing the offer to the company’s medium-term and long-term growth prospects and market opportunities, the directors decided the proposal offered attractive and certain value for Altium shareholders.

Altium expects the scheme will be submitted for final court approval before the end of the year and hopefully “well before that time”.

The Altium CEO Aram Mirkazemi said:

I strongly believe that electronics is the single most critical industry to building a smart and sustainable world. Renesas’ visionary leadership and commitment to making electronics accessible to all resonates strongly with Altium. Altium’s vision of industry transformation finds its fullest expression in service of this grand vision of Renesas.

Having worked closely with Renesas as a partner for nearly two years, we are excited to be part of the Renesas team as we continue to successfully execute and grow.

Final thoughts on Altium shares

It’ll be a shame to lose Altium from the ASX, as it’s probably one of the highest-quality businesses the ASX has ever seen, in my opinion.

But, the offer was huge, at an already-elevated Altium share price. I can see why Altium accepted.

While shareholders won’t benefit any more, I think Altium still has a very promising future in the electronics world.

With the takeover already accepted, it could sense to sell Altium shares soon, assuming there isn’t another takeover offer, which seems unlikely.

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At the time of publishing, Jaz owns shares of Altium.
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