Investors, fund OK Renesas buyout

Hitachi, NEC, Mitsubishi unit to give chipmaker cash but thousands of employees face the ax

Kyodo

Hitachi Ltd. and two other major shareholders of Renesas Electronics Corp. have reached a basic deal on a buyout plan for the struggling chipmaker, along with a government-backed turnaround fund that will entail the elimination of thousands of jobs, sources said Monday.

The purchase plan presented last month by Innovation Network Corp. of Japan, involving an investment totaling about ¥200 billion, is expected to be finalized early next month, the sources said.

The deal has been struck between the fund and the three top shareholders, Hitachi, NEC Corp. and Mitsubishi Electric Corp.

Renesas, a leading maker of microcontrollers and other semiconductors, is expected to cut about another 5,000 workers as part of its turnaround efforts.

The fund has been asking the three major shareholders to employ about 1,000 of the workers among them.

Mitsubishi Electric plans to accept more than 100 Renesas employees. But NEC — which itself is facing tough business conditions and is carrying out a cut of some 10,000 workers worldwide — is considering providing financial assistance to the chipmaker instead of taking on staff, according to the sources.

The fund will invest about ¥180 billion and acquire around two-thirds of Renesas’ shares.

The rest will be acquired by the chipmaker’s eight major clients, including Toyota Motor Corp. and Panasonic Corp.

U.S. investment fund Kohlberg Kravis Roberts & Co. had proposed buying Renesas. But the Japanese public-private alliance countered the proposal, fearing it could compromise the supply of microcomputers, essential to many automotive and consumer electronics products.