Infineon Will Buy Cypress Semi in Latest Chip Mega-Deal

Infineon Will Buy Cypress Semi in Latest Chip Mega-Deal
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Infineon agreed to buy Cypress Semiconductors for about $8.7 billion in cash, the latest mega-deal for an industry grappling with slowing growth, according to Bloomberg.

The $23.85 a share offer is a 34% premium to Cypress’s Friday close, and is 50% above the price the stock was trading at on May 29, when Bloomberg first reported takeover interest. Including debt, the deal values Cypress at 9 billion euros, the companies said in a statement.

“Cypress’s products ideally complement our own offerings,“ Infineon CEO Reinhard Ploss said on a call with reporters. “The company is a perfect fit, technologically and strategically.“ Infineon is financing the acquisition so that the company still meets "all requirements for an investment-grade rating,“ Ploss said on the call. Management is "feeling very comfortable“ when it comes to regulatory approval, he said.

Still, the combined entity would have sales that would place it among the top 10 of chip-makers globally, according to Citibank. Buying Cypress will hand Infineon a memory chip maker re-positioning itself as a provider to automobiles and other connected devices.

Cypress designs and manufactures flash memory chips and microcontrollers, or chips used for powering small electronic devices. The company has been trying to recast itself as a provider of chips for vehicles and the growing market for the so-called internet of things, the push by the electronics industry to connect devices. Cypress has told investors it expects its automotive business to grow 8% to 12% over the next five years and its IoT unit to expand at as much as 14% in that period.