Infineon to acquire Cypress in a €9.0 billion deal

“The planned acquisition of Cypress is a landmark step in Infineon’s strategic development. We will strengthen and accelerate our profitable growth and put our business on a broader basis. With this transaction, we will be able to offer our customers the most comprehensive portfolio for linking the real with the digital world. This will open up additional growth potential in the automotive, industrial and Internet of Things sectors. This transaction also makes our business model even more resilient," says Reinhard Ploss, CEO of Infineon, in a press release detailing the transaction. With the addition of Cypress, Infineon says it will strengthen its focus on structural growth drivers and serve a broader range of applications. This is thought to accelerate the company’s path of profitable growth of recent years. Cypress has a broad portfolio of microcontrollers as well as software and connectivity components that are complementary to Infineon’s power semiconductors, sensors and security solutions. Also, adding Cypress’s strong R&D and geographical presence in the U.S to Infineon not only strengthens its capabilities for its major customers in North America, but also in other important geographical regions. The company adds to its R&D presence in Silicon Valley and gains presence, as well as market share, in the important Japanese market. At the same time, Infineon aims to achieve significant economies of scale, making Infineon's business model even more resilient. Based on pro forma revenues of EUR10 billion in FY 2018, the transaction will make Infineon the number eight chip manufacturer in the world. Under the terms of the agreement, Infineon will offer USD 23.85 in cash for all outstanding shares of Cypress. This corresponds to a fully diluted enterprise value for Cypress of EUR 9.0 billion. “The Cypress team is excited to join forces with Infineon to capitalize on the multi-billion dollar opportunities from the massive rise in connectivity and computing requirements of the next technology waves," adds Hassane El-Khoury, President and CEO of Cypress. "Jointly, we will enable more secure, seamless connections, and provide more complete hardware and software sets to strengthen our customers’ products and technologies in their end markets." The acquisition is still subject to approval by Cypress's shareholders and also the relevant regulatory bodies as well as other customary conditions. The companies expect to close the transaction by the end of calendar year 2019 or early 2020.