Cypress Semiconductor Corp is acquiring Spansion Inc for about US$1.6 billion in stock, creating a company that plans to supply chips for products including cars and consumer electronics.
Under the agreement, Spansion shareholders are set to receive 2.46 Cypress shares for each Spansion share they own, the firms said in a statement yesterday.
Based on Cypress’s closing price of US$10.43 on Monday and Spansion’s share count, the deal values Spansion at about US$1.6 billion.
The resulting entity, which would have more than US$2 billion in annual revenue, is scheduled to be owned about evenly by Spansion and Cypress shareholders, with a new eight-person board made up of four directors from each company. The combined business is set to be led by Cypress chief executive officer T.J. Rodgers, while Spansion chairman Ray Bingham is said to become non-executive chairman.
The deal is set to create a semiconductor company that would be the biggest provider of certain types of chips for embedded systems.
San Jose, California-based Cypress is one of the largest makers of a flash chip called SRAM, which is used in consumer electronics. Sunnyvale, California-based Spansion makes NOR flash systems, typically used in automobiles and industrial systems.
Cypress shares rose as much as 12 percent in extended trading on Monday, while Spansion soared as much as 19 percent in extended trading after closing at US$22.85 in New York.
The purchase adds to what has been the busiest year for chipmaker deals since 2011. Almost US$11 billion in North American semiconductor transactions were announced in the first six months, according to data compiled by Bloomberg.
With earnings becoming more consistent and expenses declining, semiconductor companies have seen cash reserves swell and might now have a chance to spend that money on deals, Nomura Holdings Inc said in July.
The acquisition is also set to result in US$135 million in annual savings over the next three years, the companies said. The combined entity, which is going to be called Cypress Semiconductor, would pay US$0.11 a share in a quarterly dividend. The companies project the deal would close in the first half of next year.
Jefferies LLC and Morgan Stanley served as financial advisers to Spansion, while Qatalyst Partners advised Cypress.
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