Renesas, NEC Electronics sign up on merger dotted line

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NEC Electronics and Renesas have taken one step further in their intent to merge the two companies on April 1, 2010.

The companies said they have entered into a formal merger agreement to integrate their operations, subject only to resolutions of shareholders of both companies and the regulatory authorities.

The merged company will provide a portfolio of products globally including microcontroller units, system on chip (SoC) semiconductors and discrete products.

But as part of the merger, both companies will "execute structural reform plans" - corporate speak for cutting jobs and reducing costs at the merged giant.

NEC Electronics will issue 20.5 shares of its common stock in exchange for every Renesas common share.

On merger, NEC Electronics will issue 168,481,500 shares. Renesas will release shares of its common stock to Hitachi and Mitsubishi Electric, the only Renesas shareholders.

The name of the merged company will be Renesas Electronics Corporation, and its headquarters will be in Kawasaki City, Kanagawa Prefecture, Japan.