Infineon Technologies has agreed to buy Cypress Semiconductor for USD 23.85 per share in cash, for a total enterprise value of EUR 9.0 billion. Infineon CEO Reinhard Ploss said the deal will open up additional growth potential in the automotive, industrial and Internet of Things sectors and make the company’s business model more resilient. The acquisition will also strengthen Infineon’s geographical reach, especially in the Japanese market.
Infineon expects to achieve significant economies of scale: based on pro forma revenues of EUR 10 billion in full year, the transaction will make Infineon the number eight chip manufacturer in the world and the number one supplier of chips to the automotive market. Following full integration, cost synergies are seen at USD 180 million per year by 202. The complementary portfolios will also enable the merged company to provide more chip services, with a revenue synergies potential of over EUR 1.5 billion per year in the long term. The acquisition is expected to add to earnings from the first year after close and to complete by the end of this year or the start of 2020.
After integration, Infineon said it will adapt its target operating model, with the aim of having through-cycle revenue growth of over 9 percent and a segment result margin of 19 percent. The investment-to-sales ratio should decrease to 13 percent.The acquisition will have to be still be approved by Cypress shareholders and get the usual regulatory approvals.
