Global semiconductor solution provider Reza Electronics (TSE: 6723) and global gallium nitride (GaN) power semiconductor supplier Transform, Inc. (Transform, Nasdaq: TGAN) announced today that they have reached a final agreement, under which Reza subsidiary will acquire all issued common shares of Transform for $5.10 per share in cash, Compared to the closing price of Transform on January 10, 2024, the premium is about 35%, the premium is about 56%, and the premium is about 78%. The valuation of Transform for this transaction is approximately $339 million. This acquisition will provide Renesas with internal technology for GaN (the next generation key material for power semiconductors), thereby expanding its business scope in fast-growing markets such as electric vehicles, computing (data centers, artificial intelligence, infrastructure), renewable energy, industrial power, and fast chargers/adapters.

As the cornerstone of carbon neutrality, the demand for efficient power systems is constantly increasing. In response to this trend, related industries are transitioning towards wide bandgap (WBG) materials represented by silicon carbide (SiC) and GaN. These advanced materials have a wider voltage and switching frequency range than traditional silicon-based devices. Under this momentum, Renesas has announced the establishment of an internal SiC production line and signed a 10-year SiC wafer supply agreement.

Reza's current goal is to further expand its WBG product lineup by leveraging Transform's expertise in GaN. GaN is an emerging material that can achieve higher switching frequencies, lower power losses, and smaller external dimensions. These advantages make the customer's system more efficient, smaller, lighter in structure, and lower in overall cost. Therefore, according to industry research, the demand for GaN is expected to grow by more than 50% annually. Renesas will use Transform's automotive grade GaN technology to develop new enhanced power solutions, such as X-in-1 powertrain solutions for electric vehicles and solutions for computing, energy, industrial, and consumer applications.

"Transform is a company led by an experienced team from the University of California, Santa Barbara, rooted in GaN power. The addition of Transform GaN technology has strengthened our momentum in the IGBT and SiC fields. It will drive and expand one of our key growth pillars, the power product lineup, allowing our customers to choose the best power solutions," said Hideki Shibata, CEO of Renesas

Co founder of Transform Dr. Primit Parikh, President and CEO, and Dr. Umesh Mishra, co-founder and Chief Technology Officer of Transform, stated: Combining Reza's global layout, extensive solutions, and customer relationships, we are pleased to pave the way for the widespread adoption of WBG materials in the industry, laying the foundation for its significant growth. This transaction will also enable us to provide further expansion services to our customers and bring considerable immediate cash value to our shareholders. In addition, it will provide a powerful platform for our outstanding team to further develop Transform Zhuo "More advanced GaN technology and products."

Transaction details

The Transform board of directors has unanimously approved the final agreement and recommended that Transform shareholders approve the final transaction and approve the merger. At the same time as signing the final agreement, KKR Phorm Investors L.P., which holds approximately 38.6% of the issued common shares of Transformer, has signed a customary voting agreement with Renesas to support this transaction.

The transaction is expected to be completed in the second half of 2024, but requires approval from Transformer shareholders, regulatory approval, and compliance with other customary transaction conditions.

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