Japan's Renesas soars on news of rescue deal

Shares in Japan's Renesas Electronics surged nearly 17 percent Monday on reports that its three major shareholders and a government fund had reached a final accord on the embattled chipmaker's bailout. The stock was 16.60 percent higher by the close at 337 yen on the Tokyo Stock Exchange. The Nikkei economic daily and other media reported Monday that the chipmaker's three largest shareholders have agreed to a purchase of the firm by the government-backed Innovation Network Corp. of Japan (INCJ). Details will be announced early next month, they said. The government fund in late October proposed a state-led bailout of Renesas to the three shareholders -- NEC, Hitachi and Mitsubishi Electric, the Nikkei said. The INCJ demanded that Renesas slash its work force by another 5,000 or so as part of the bailout deal, asking the three largest shareholders to take on around 1,000 of these workers, it said. The trio have agreed to the work force cuts and other terms, while the INCJ will pay more than 180 billion yen ($2.2 billion) to obtain two-thirds of Renesas's shares, it said. Eight manufacturers that procure chips from Renesas, including Toyota Motor, Nissan and Canon will invest more than 10 billion yen combined to take a total interest of around five percent, it said. NEC, Hitachi and Mitsubishi Electric, which now hold a combined 90 percent stake in Renesas on a voting-rights basis, will become minority shareholders once the INCJ takes over, it said. Renesas is the world's top supplier of microcontrollers, which function as the brain of automobiles and many electronics products. It holds a 17-percent global market share but has struggled with a strong yen and fierce competition from foreign rivals.