Germany’s Infineon Technologies said Monday that it’s buying US chipmaker Cypress in a deal that values the company at $10 billion.
In 2017, Infineon was denied the chance to buy Cree’s Wolfspeed chip and power supply business by US regulators. Infineon was going to pay $850 million for Wolfspeed. The next year, Cree ended up buying Infineon’s RF and power business for $430 million. Wolfspeed has since become the center of Cree’s business after the company sold off its lighting group.
The new tie-up could help Infineon become a bigger player in chips used to power connected devices such as cars. But the price of the merger is raising eyebrows. Infineon shares fell more than 6% in early trading Monday.
Interestingly, Wolfspeed is a major power in the connected cars and device business and is seeking to expand its market penetration.
Infineon will pay $23.85 for each outstanding share of Cypress in the deal, which is expected to close late this year or early in 2020. The companies said the sale price represents a 46% premium to Cypress’s share price over the past six weeks.
Infineon said Monday the acquisition will make it the eighth biggest chipmaker in the world and the leading supplier of chips to the automotive sector.
The companies expect cost synergies of 180 million euros ($201 million) per year by 2022.
Shares in the San Jose, California-based Cypress jumped more than 20% in premarket trading. The company, which specializes in wireless and USB technology, had $539 million in revenue in the first quarter.
