German semiconductor manufacturer Infineon Technologies is nearing a deal to acquire Cypress Semiconductor for an enterprise value of $10 billion, including debt, according to media reports.
As part of the agreement, Infineon will pay between $23-$24 a share for the acquisition. The estimate is 55 percent higher than the stock price was last week. Susquehanna analyst Christopher Rolland told Barron that Cypress could be worth as much $25 per share. According to him, Cypress’ is attracting mergers and acquisitions with its new focus on auto and IoT.
However, other analysts have noted Cypress’ per share price which was much lower than expected.
Cypress shares closed at $17.82 on Friday, marking a -0.39% move from the previous day. With that, the company has a market valuation of $6.5 billion.
Infineon acquiring Cypress might gain leverage to strengthen its presence in industrial and consumer devices, the Wall Street Journal said. Cypress designs and manufactures flash memory chips and microcontrollers used for small electronic devices.
Cypress has informed investors that it expects its automotive business to grow between 8 percent and 12 percent in the next five years. In addition, it expects its IoT unit to develop to nearly 14 percent in that period.
According to Bloomberg Intelligence, Infineon’s plans to acquire Cypress might be a tad complicated, especially with the former focused on power chips, IoT, and speciality memory.
Both companies expect the transaction to close by the end of this year, or early next year.