Infineon to acquire Cypress Semiconductor for $23.85 per share, valuing the company at €9B, at about 33% premium to its Friday closing price of $17.82 | UP TECHONOLOGY

Infineon Technologies AG is a German semiconductor manufacturer founded on 1 April 1999, when the semiconductor operations of the parent company Siemens AG were spun off to form a separate legal entity

• The proposed acquisition values Cypress at about $10 billion.
• Semiconductor players are wrestling with slowing growth.

Infineon to acquire Cypress Semiconductor for $23.85 per share, valuing the company at €9B, at about 33% premium to its Friday closing price of $17.82 | UP TECHONOLOGY

Infineon Technologies AG agreed to buy Cypress Semiconductor Corp. in a deal that values the U.S. target at about $10 billion including debt, the latest mega-deal for an industry grappling with slowing growth.

The deal confers an enterprise value of 9 billion euros ($10 billion) on Cypress, a memory chip maker re-positioning itself as a provider to automobiles and other connected devices. Infineon’s cash offer of $23.85 a share marks a 46% premium to Cypress’s average price over the past 30 days, the companies said in a statement confirming an earlier Bloomberg report.

Shares of Infineon fell as much as 6.5% during early trading Monday in Frankfurt.

The semiconductor industry has been reshaped over the past five years as companies combine to gain scale while fighting rising costs and shrinking customer bases. NXP Semiconductors NV recently announced a $1.76 billion deal for Marvell Technology Group Ltd.’s Wi-Fi connectivity business, while Nvidia Corp. agreed to buy chip maker Mellanox Technologies Ltd. for $6.9 billion in March.

But Infineon until now has mostly sat on the sidelines. It’s lost almost a third of its value over the past year, as the European chipmaker twice revised its forecasts to account for global economic uncertainty and a slowdown in Chinese car sales. Infineon’s offer values Cypress at roughly $8.7 billion based on its outstanding shares alone, excluding debt.

Read more: Infineon Drops After Slashing 2019 Outlook on China Weakness

What UP TECHONOLOGY Intelligence Says

Infineon’s reported plans to acquire Cypress may result in some arduous integration work, with the buyer focused on power chips and the target on Internet of Things and specialty memory. Infineon makes about a quarter of its sales in China, which has turned into a headwind as the economy slows. It will need stronger 2H sales to meet its 8 billion-euro sales guidance.

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