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Infineon has agreed to buy Cypress Semiconductor as part of a $ 10 billion chipset contract.
Infineon Technologies pays $ 23.85 per cash share ($ 10 billion in enterprise value) in addition to maintaining its dividend until closing. This represents a 55% increase over last week's share price before news began to flow.
The deal shows that the flea-sector consolidation trend – which has engulfed 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 resigned in 2016, but he was a Cypress activist shareholder. 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.
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 the 2019 or early 2020 calendar year.
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