Japanese semiconductor firm Renesas on Tuesday announced a deal to buy California-based IDT in a cash deal valued at $6.7 billion.
Shares in Renesas spiked 5.54 percent on the news, before dropping back slightly in the late morning.
The deal is expected to be closed in the first half of next year, following approval by IDT shareholders and the relevant regulatory authorities, Renesas said in a statement.
Renesas said it planned to finance the deal using bank loans worth 679 billion yen ($6.1 billion) as well as some cash reserves.
The Japanese firm said the deal with IDT, also a semiconductor manufacturer, should "strengthen its presence in the industrial and automotive segments." Renesas Electronics, the world's biggest supplier of automotive microcontroller chips, was created through a merger of the chip units of Hitachi, Mitsubishi Electric and NEC.
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