Infineon Technologies AG has agreed to buy Cypress Semiconductor Corp in a deal that values the US target at about US$10 billion, the latest mega-deal for an industry grappling with slowing growth.
The deal confers an enterprise value of 9 billion euros (US$10 billion) on Cypress, a memorychip maker repositioning itself as a provider to vehicles and other connected devices.
Infineon’s cash offer of US$23.85 a share marks a 46 percent premium to Cypress’ average price over the past 30 days, the companies said in a statement confirming an earlier Bloomberg report.
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 has announced a US$1.76 billion deal for Marvell Technology Group Ltd’s Wi-Fi connectivity business, while Nvidia Corp in March agreed to buy chipmaker Mellanox Technologies Ltd for US$6.9 billion.
However, Infineon until now has mostly sat on the sidelines. It has lost almost one-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 vehicle sales.
Infineon’s offer values Cypress at about US$8.7 billion based on its outstanding shares alone, excluding debt.
Infineon’s target designs and manufactures flash memory chips and microcontrollers, or chips used for powering small electronic devices.
Cypress has been trying to recast itself as a provider of chips for use in vehicles and the growing market for Internet of Things, the push by the electronics industry to connect devices.
It has told investors it expects its automotive business to grow 8 to 12 percent over the next five years and its Internet of Things unit to expand at as much as 14 percent in that period.
Annual revenue, helped by an acquisition, has more than doubled in five years to US$2.5 billion last year.
Analysts have predicted that sales growth would disappear this year, forecasting a contraction of about 11 percent, according to the average of analysts’ estimates from data compiled by Bloomberg.
“This will accelerate the company’s path of profitable growth of recent years,” Infineon said in its statement.
It remains to be seen whether Infineon can win the necessary regulatory approvals in the midst of escalating trade battles.
China last year effectively killed Qualcomm Inc’s planned US$44 billion takeover of NXP Semiconductors NV by withholding its approval for more than 20 months.
China later said it was not to blame for the deal falling apart.
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