CG Power to buy RF components business of Renesas for $36 mn; share up 3%

CG Power's share price rose after the company announced that it has inked a deal to acquire Radio Frequency (RF) Components business of Renesas for $36 million in an all-cash deal

CG Power share price: CG Power and Industrial Solutions shares gained up to 2.78 per cent to hit an intraday high of Rs 738.80 per share. 

CG Power’s share price rose after the company announced that it has entered into a definitive agreement i.e., Asset Purchase Agreement with Renesas Electronics America Inc. & other affiliate entities of Renesas Electronics Corporation (Renesas) for acquisition of Radio Frequency (RF) Components business in an all-cash deal.

In an exchange filing, CG Power said, “We wish to inform that CG Power and Industrial Solutions Limited (“the Company”) has yesterday (i.e., 4 th October 2024) entered into a Definitive Agreement i.e., Asset Purchase Agreement with Renesas Electronics America Inc. & other affiliate entities of Renesas Electronics Corporation (“Renesas”) for acquisition of Radio Frequency (“RF”) Components business, through one or more subsidiaries to be incorporated by the Company.”

 

The proposed acquisition of RF Components business is for a consideration of about $36 million, subject to customary adjustments and applicable taxes, CG Power said in a statement.

That said, RF Components business consists of equipment, intellectual properties, inventories, customers, select transferring employees, contracts and other licences. The RF components business had an annual revenue of about $56 million in the Calendar Year 2023, the company said in a statement. 

Vellayan Subbiah, vhairman of CG Power and Industrial Solutions Limited, said, "A significant number of semiconductor designers globally are Indians. Through this acquisition, we aim to enhance India’s presence in the semiconductor design & development space, considered to be a high-growth and high-profitability sector."

Through this transaction, CG Power said that it will acquire Intellectual Property (IP), tangible assets and select transferring employees across various functions such as semiconductor design, marketing, applications, etc. related to the RF components business. 

Davin Lee, senior vice president and general manager of the Analog and Connectivity Group at Renesas, said, “This agreement with CG will provide the opportunity for our RF team to expand. We are pleased that CG will deliver outstanding RF technology and world-class support to our customers, and we will support a smooth transition to facilitate the same. For Renesas, this move sharpens our focus on the strategic segment of our analog and connectivity business, enabling us to further scale to better serve customer demand.”

CG Power and Industrial Solutions Limited, headquartered in Mumbai, is a key player in the Electrical Engineering sector, known for its diverse offerings in both Industrial Systems and Power Systems. The company manufactures critical components for the Indian Railways, including traction motors and propulsion systems, alongside a variety of products like induction motors, drives, transformers, and switchgears for industrial and power applications. 

Recently, CG Power has expanded its portfolio to include consumer appliances such as fans, pumps, and water heaters, diversifying its reach within the market. With world-class manufacturing facilities spread across nine locations in India and one in Sweden, the company supports its operations through a comprehensive network of regional and branch offices.

In FY24, CG Power reported consolidated revenues of Rs 8,046 crore (approximately $964 million), highlighting its strong market presence and commitment to innovation and sustainability. The company became part of the Murugappa Group in November 2020, further strengthening its position.

At 1:40 PM, shares of CG Power were trading 2.25 per cent higher at Rs 735 per share. In comparison, BSE Sensex was trading 0.94 per cent lower at 80,917.09 levels.