The companies announced they have signed a definitive agreement for Infineon to acquire Cypress for 23.85 US dollars per share in cash which corresponds to a value of 10.1 billion dollars. The deal amounts to a 46% premium on the price of Cypress shares based on last month’s value. Cypress management expects the deal to be completed by early 2020.
According to Reinhard Ploss, CEO at Infineon the proposed acquisition of Cypress represents a major step in the company’s strategic planning. With the acquisition, Infineon will see its global ranking rise to eighth in the league of chip manufacturers and will strengthen its position as the leading supplier of chips to the automotive sector. It is anticipated that efficiency gains and business restructuring resulting from the merger should result in an annual 200 million US dollar cost saving to the company in the long term.
Share prices reactCypress shareholders will still need to agree to the offer and investors were not convinced by the sums, sending Infineon shares down while Cypress shares leapt 27% to $22.74 in US pre-market trading but still significantly below Infineon’s offer valuation.
The deal is also subject to regulatory approval but Infineon do not expect the Committee on Foreign Investment in the United States to block the arrangement because the technology and IP acquisition involved in the takeover is unlikely to pose a threat to national security.