Japanese chip maker Renesas has agreed to buy California-based Intersil for about $3.2 billion, a step aimed at beefing up its strength as an automotive-related semiconductor provider.
Renesas will pay $22.50 a share for the U.S. chip maker. The deal is expected to be completed by the first half of 2017 after approval from Intersil shareholders and regulators.
Renesas executives said the premium was justified by the synergy effects from the acquisition. The company said it planned to pay for the acquisition in cash.
The semiconductor industry has experienced a wave of consolidation as chip makers and their suppliers look to build scale in response to slowing growth and rising costs.
Renesas has been focusing its resources on its automotive business, where growth is expected because car makers are adding technology that requires semiconductors such as autonomous-driving features.