Infineon is approaching to buy Cypress Semiconductor

(Bloomberg) – Infineon Technologies AG is close to an agreement to buy Cypress Semiconductor Corp., according to people familiar with the case.

Companies could announce an agreement on the appreciation of Cypress Semi of nearly $ 1[ads1]0 billion, including debt, as soon as Monday, the people said, asking not to be identified as the details are not public. Infineon will pay $ 23 to $ 24 per share for Cypress Semi, two of the people said, a premium of more than 50% over the stock price before Bloomberg reported last week that the chip maker considered a sale after receiving takeover interest.

Cypress Semi shares closed at $ 17.82 on Friday, giving the company a market value of $ 6.5 billion.

A representative of Cypress Semi, who was not in San Jose, refused to comment. A representative of Neubiberg, Germany-based Infineon, did not immediately respond to a request for comment.

Infineon, with a market capitalization of EUR 18.2 billion ($ 20 billion), has been largely sidelined over the past five years as the semiconductor industry has been transformed by dealmaking. In 2017, it concluded an agreement to purchase the Wolfspeed Power unit for the LED and lighting creator Cree Inc. after a US security review.

Infineon's shares have lost nearly a third of their value over the past year, with chipmaker revising its forecasts twice through global economic uncertainties and a decline in car sales in China.

Cypress Semi designs and manufactures flash memory chips and microcontrollers, or chips used to power small electronic devices.

The company has tried to transform itself As a supplier of chips for use in vehicles and the growing market for so-called internet of things, the electronics industry is pushing to connect devices. It is reported that investors expect their automotive industry to grow by 8% to 12% over the next five years, and its IoT unit will expand by as much as 14% during that period.

Annual revenue, aided by an acquisition, has more than doubled in five years to $ 2.5 billion in 2018. Analysts predict sales growth will disappear this year, projecting a contraction of around 11%, according to analyst estimates estimates from data prepared by Bloomberg.

What Bloomberg Intelligence says

Infineon's reported plans to acquire Cypress can result in some hard integration work, with the buyer focused on power chips and the goal of things and specialty memories. Infineon produces about a quarter of its sales in China, which has become a wind blow as the economy slows down. It will need stronger 2H sales to meet the sales guide for 8 billion euros.

– Anand Srinivasan and Johnathan Ritucci, analysts – Click here to read the survey

(Updates with details of Cypress Semi business in eighth paragraph.)

To contact journalists on this story: Liana Baker in New York at, Ian King in San Francisco at, Ed Hammond in New York at [19659015] To contact the editors responsible for this story: Elizabeth Fournier at efournier5 @ bloomberg .net, Jillian Ward at, Fion Li

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