Japanese chipmaker Renesas Electronics (RNECY) announced it will wholly acquire Intersil (ISIL) in a bid to boost its products offerings in the areas of automotive, industrial and Internet of Things, as well as expanding its geographical footprint.

The Tokyo-based Renesas will acquire all of U.S. rival Intersil's outstanding shares for about $3.2 billion, or $22.5 per share in cash. This represents a 43.9% premium over Intersil's closing share price on Aug. 19, just before the company announced it was considering the acquisition.

The announcement was made before the markets opened on Tuesday in Japan. Renesas shares advanced 2.2% to ¥616 ($6.10). Intersil shares jumped 7.34% on the Nasdaq to $21.21 in after-hour trading hours.

Renesas said it expects the deal to "eventually" create a synergy of $170 million as a result of short and long-term sales growth and cost efficiencies. Renesas chief financial officer Hidetoshi Shibata reportedly told the press that he expects synergies to surface in a considerably short period, and that the purchase price was sufficiently justified.

The Milpitas, California-based Intersil's strength lies in power management chips and analog chips used for industrial, infrastructure, automotive, and aerospace purposes. Combining this with Renesas's microcontroller and system-on-chip products, the Japanese chipmaker aims to boost its position in the automotive industrial, cloud computing, healthcare and Internet of Things markets, where it sees growth potential. Renesas especially sees growth potential in analog semiconductors, for which it estimated the market to increase by $3.9 billion by 2020.

Intersil booked revenue of $522 million in 2015. Renesas reported sales of ¥693 billion for the year ended March 2016.

The acquisition is expected to be completed in the first half of 2017, following shareholder and regulatory approvals.

Renesas was formed in 2010 through a merger between Renesas Technology and NEC Electronics with the backing of the public-private investment fund Innovation Network Corporation of Japan. INCJ had brought the troubled semiconductor businesses of Hitachi and Mitsubishi Electric, which formed Renesas Technology, and the semiconductor arm of NEC.

The company only booked its first profit in the year ended March 2015 after being hit by the impact of the Great East Japan Earthquake and flooding in Thailand in 2011. Since turning the business around, eyes have also been on to whom INCJ would sell its 70% holdings in Renesas. Companies like Germany's Infineon Technologies and Nidec NJ have emerged as potential buyers.