NEW YORK (TheStreet) -- Shares of Intersil (ISIL) were advancing 9.31% to $21.60 in pre-market trading on Tuesday as the Milpitas, CA-based semiconductor company agreed to be purchased by the Japanese chip maker Renesas Electronics for $3.2 billion, or $22.50 per share, in cash.
The acquisition will boost Renesas' in the automotive-related semiconductor and Internet of Things markets, the company said in a statement this morning.
Intersil manufactures analog chips, which process signals such as sound, light and temperature before converting them into digital signals, Reuters reports.
The deal is expected to close by the first half of 2017, pending shareholder approval, Renesas added.
Renesas has shifted its focus to the automotive business as more car makers are adding technology that requires semiconductors, such as autonomous driving features, according to the Wall Street Journal.
In the most recent fiscal year, Renesas' automotive and industrial business made up 70% of its revenue, up from 55% three years earlier.
The deal will help Renesas produce technology for in-vehicle entertainment, battery management and safety systems, the company said.
Renesas beat out Maxim Integrated Products (MXIM) on the acquisition, sources said, according to Reuters. The San Jose, CA-based company could now be at the center of further consolidation in the analog chip sector.
Separately, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
The team rates Intersil as a Buy with a ratings score of B. This is driven by a number of strengths, which it believes should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks it covers. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations, solid stock price performance and expanding profit margins. The team feels its strengths outweigh the fact that the company has had sub par growth in net income.
You can view the full analysis from the report here: