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Infineon Technologies has agreed to purchase Cypress Semiconductor as part of a $ 10 billion chipset contract.
Infineon pays $ 23.85 per share in cash ($ 10 billion in business value, excluding debt), in addition to the continuation of its dividend until closing. That's 55% higher than the stock price was last week before the news started to flow.
The deal shows that the flea-sector consolidation trend – which has swept many Silicon Valley companies from Altera to NXP – continues.
The stock price is an all-time record for Cypress, and it's a good way for a legendary Silicon Valley to go out in style.
Cypress was founded in 1982 by T.J. Rodgers, a fan of Green Bay Packers who was also a brilliant chip engineer. He has also helped Cypress become an experienced manufacturer of a wide variety of memory chips, sensors and the Internet of Things.
Above: T.J. Rodgers from Cypress Semiconductor
Image credit: Cypress / Wikipdia
Early on to recognize the value of silicon enhanced solar cells, Rodgers invested in SunPower in 2002 and then helped launch an initial public offering in 2005. Cypress has achieved a significant return on this transaction.
But Cypress was known for its larger-than-life founder, who said scandalous things (like "real men have tricks") and yet was known as an intelligent and fiercely independent libertarian. With regard to manufacturing plants, or platelet manufacturing plants (chip factories), Rodgers was adamant that owning one's own factories was the way to success in semiconductors. (This eventually turned out to be wrong). Rodgers has reached thousands of employees.
Rodgers resigned in 2016 and was replaced by but he was an activist shareholder in Cypress. He set himself as a personal goal to create the best pinot noir in the world in his vineyard located in the Santa Cruz Mountains. I walked once in his vineyard, while it was equipped with the monitoring equipment of the Internet. We laughed by telling stories about the fact that Cypress staff (voluntarily) pick their grapes.
In the 1980s and 1990s, Rodgers was recognized as the toughest boss in Silicon Valley, still holding executives and employees accountable. He said that he liked that companies set themselves an "ambitious, bold and daring goal," or BHAG, so that they could always achieve better results. When I was still at San Jose Mercury News,
At the time of the acquisition, Cypress was valued at 18.2 times NTM EBITDA (measure of profitability).
The companies expect the transaction to be completed by the end of 2019 or early 2020.
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