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Monday, June 3, 2019

Infineon is nearing an agreement to buy Cypress Semiconductor

Infineon is nearing an agreement to buy Cypress Semiconductor
(Bloomberg) - Infineon Technologies AG is close to reaching an agreement to acquire Cypress Semiconductor Corp., according to people familiar with the matter.

Companies can announce a contract that values ​​Cypress Semi at around $ 10 billion, including debt, as early as Monday, said the people who asked not to be identified because the details are not public. Infineon will pay $ 23 to $ 24 per share for Cypress Semi, two of the people said, a premium of more than 50% over the stock price before Bloomberg reported last week that the chip maker was considering a sale after taking the acquisition interest.

Cypress Semi shares closed at $ 17.82 on Friday, giving the company a market value of $ 6.5 billion.

A Cypress representative based in San Jose A representative of Neubiberg, Infineon, based in Germany, did not respond to a request for comment.

Infineon, with a market value of 18,200 million euros (20,000 million dollars), has remained practically untouched in the last five years, since the semiconductor industry has been transformed through agreements. In 2017, it finalized an agreement to acquire the Wolfspeed Power unit of the LED and the lighting manufacturer Cree Inc. after a US national safety review. UU

Infineon shares have lost almost a third of their value in the last year, with the chip maker reviewing its forecast twice in China, global economic uncertainties and a slowdown in car sales.

Cypress Semi designs and manufactures flash memory chips and microcontrollers, or chips used to power small electronic devices.

The company has been trying to become a supplier of chips for use in vehicles and in the growing market for the so-called Internet of Things, the impulse of the electronic industry to connect devices. It is said that investors expect their auto business to grow between 8% and 12% in the next five years and their IoT unit is at that time as much as 14% in that period.

Annual revenues, helped by the acquisition, have more than doubled in five years to $ 2.5 billion in 2018. Analysts predict that sales growth will disappear this year, forecasting a contraction of around 11%, according to estimates of data analysts compiled from the average by Bloomberg

What Bloomberg Intelligence says


The plans reported by Infineon to acquire Cypress can result in difficult integration work, with the buyer focused on the power chips and the target on the Internet. Infineon makes about a quarter of its sales in China, which has become an obstacle as the economy slows down. It will require strong 2H sales to meet its sales guide of 8 billion euros.