Renesas Shares Jump as CEO Says Government Stake Too Big

Renesas Electronics Corp. (6723) rose the most in more than a year after saying the stake held in the company by a government-backed fund is too large.

The maker of electronic components jumped by the daily limit of 150 yen, or 17 percent, to close at 1,024 yen in Tokyo for the biggest gain since May 2013. The controlling stake held by the government-backed Innovation Network Corp. of Japan fund, known as INCJ, is “abnormal,” Renesas Chief Executive Officer Hisao Sakuta said yesterday in Tokyo, declining to say whether the situation will change.

The comment suggests INCJ and others are willing to sell down their stakes because Renesas has been successful in restructuring, Damian Thong, a Tokyo-based analyst at Macquarie Group Ltd., said by phone today. The company has announced thousands of job cuts since INCJ and Renesas’s customers agreed in December 2012 to bail out the unprofitable company.

“Investor interest has increased because of the success of the restructuring and now the potential removal of the liquidity restraint with a potential sale by INCJ,” Thong said.

INCJ owns 69 percent of the Kawasaki-based manufacturer, according to data compiled by Bloomberg. Customers including NEC Corp., Hitachi Ltd., Mitsubishi Electric Corp., Toyota Motor Corp. and Nissan Motor Co. also own stakes totaling at least 27 percent, according to the data.

Photographer: Tomohiro Ohsumi/Bloomberg

An employee works in a clean room on the production line for 300mm wafers at Renesas Electronics Corp.'s Naka plant in Hitachinaka city, Ibaraki prefecture, Japan. Close

An employee works in a clean room on the production line for 300mm wafers at Renesas... Read More

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Photographer: Tomohiro Ohsumi/Bloomberg

An employee works in a clean room on the production line for 300mm wafers at Renesas Electronics Corp.'s Naka plant in Hitachinaka city, Ibaraki prefecture, Japan.

Renesas has completed 60 percent of its planned restructuring, Sakuta said yesterday. The company may post some one-time losses in the current fiscal year due to the restructuring, he said.

Renesas, the world’s biggest maker of microcontrollers for cars, expects sales to automakers to rise to more than 50 percent of the company’s total in the year ending March 2017, Sakuta said.

The company has posted nine consecutive annual net losses as Japanese chipmakers struggled amid falling demand, a strong yen and competition from Samsung Electronics Co. Renesas has forecast a 28 billion yen ($266 million) profit for the fiscal first half ending Sept. 30.

To contact the reporter on this story: Takashi Amano in Tokyo at tamano6@bloomberg.net

To contact the editors responsible for this story: Michael Tighe at mtighe4@bloomberg.net Terje Langeland, Dave McCombs

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