Infineon to acquire Cypress for €9 Billion in Cash
3 June, 2019
The completion of the deal will create a new semiconductor's giant with 37,000 employees, 30,000 patents and €10 Billion combined annual sales (in 2018)
Infineon Technologies from Munich, Germany, has signed a definitive agreement to acquire San Jose, California based Cypress Semiconductor for US$23.85 per share in cash, corresponding to an enterprise value of approximately €9.0 billion. The price represents a 46% premium to Cypress’s traded value in NASDAQ. The funding of the acquisition is fully underwritten by a consortium of banks. The acquisition is subject to approval by Cypress’s shareholders and the bodies, and is expected to be closed by the end of 2019 or early 2020.
The completion of the deal will create a new semiconductor’s giant with 37,000 employees, 30,000 patents and €10 Billion combined annual sales (in 2018). Reinhard Ploss, CEO of Infineon (photo above), said that the deal, “Will open up growth potential in the automotive, industrial and Internet of Things sectors.” Steve Albrecht, Chairman of the Board of Directors of Cypress, revealed that there were other contestants behind the scene: “After receiving interest from several companies, we entered into a transaction that is a testament to our team’s strategy and hard work. ”
Economy of Scale in Action
Infineon estimates that the expected economies of scale will create cost synergies of €180 million per annum by 2022. The complementary portfolios will enable the offering of further chip solutions with a revenue synergies potential of more than €1.5 billion per annum in the long term. Based on pro forma revenues of €10 billion in FY 2018, the transaction will make Infineon the number eight chip manufacturer in the world.
In addition to its strong position in power semiconductors and security controllers, Infineon will now also become the number one supplier of chips to the automotive market. Cypress has a differentiated portfolio of microcontrollers as well as software and connectivity components that are highly complementary to Infineon’s leading power semiconductors, sensors and security solutions. Combining these assets will enable to provide advanced solutions for high-growth applications such as electric drives, battery-powered devices and power supplies.
Infineon: “The combination of Infineon’s security expertise and Cypress’s connectivity know-how will accelerate entry into new IoT applications in the industrial and consumer segments. In automotive semiconductors, the expanded portfolio of microcontrollers and NOR flash memories will offer great potential, especially in light of their growing importance for advanced driver assistance systems and new electronic architectures in vehicles.”