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Infineon to buy rival Cypress in $10bn deal

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FRANKFURT: Infineon has agreed to buy Cypress Semiconductors in a deal valuing the US maker of microchips used in cars and electronic devices at 9 billion euros ($10.1 billion), including debt, the German company said on Monday.


The cash offer of $23.85 per share represents a 46 per cent premium to Cypress’ share price over the last month, the German maker of power-management chips used in cars, smartphones and wind turbines said.


“With the addition of Cypress, Infineon will consequently strengthen its focus on structural growth drivers and serve a broader range of applications,” it added.


Infineon shares traded more than 5 per cent lower by 0730 GMT with some traders questioning whether Infineon was overpaying.


The Germany chipmaker said it intends to finance about 30 per cent of total transaction value with equity and remainder with a combination of debt and cash.


Asked about how the deal came about, Infineon Chief Marketing Officer Helmut Gassel said discussions had been triggered by interest expressed in Cypress by another party. Infineon was invited to take part in the process around five weeks ago, he said.


The acquisition will reap cost synergies of 180 million euros per year by 2022 and revenue synergies of more than 1.5 billion euros in the long term, Infineon said.


Once Cypress Semiconductors has been integrated, Infineon targets through-cycle revenue growth of 9 per cent or more and a segment result margin of 19 per cent.


The investment-to-sales ratio is targeted to decrease to 13 per cent. Infineon expects to keep its investment grade credit rating after the deal, Financial Officer Sven Schneider said. — afp


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