Cypress Semiconductor Corporation (NASDAQ:CY) soared Monday on word that Infineon Technologies AG announced plans to acquire the company for $23.85 per share in cash.
The per share offer price represented a 46% premium to the 30-day volume-weighted average price for the period ending May 28, the day prior to the one when reports of a potential sale emerged.
Since the German chipmaker intends to retain a solid investment grade, it said it will ultimately finance about 30 percent of the total deal value with equity and the remainder with debt as well as cash on hand. The companies expect the deal to close in the end of 2019 or early 2020.
Cypress, which makes flash memory chips and microcontrollers powering small electronic devices, has expressed its intention to focus on the automotive market and the Internet of things, or IoT.
For Infineon, the going has been tough amid geopolitical tensions, and the pursuit of inorganic growth is seen as a move to revitalize its sagging growth.
“With this transaction, we will be able to offer our customers the most comprehensive portfolio for linking the real with the digital world,” said Reinhard Ploss, CEO of Infineon.
“This will open up additional growth potential in the automotive, industrial and Internet of Things sectors. This transaction also makes our business model even more resilient.”
The closing of the transaction is subject to approval by Cypress shareholders, and securing of other regulatory approvals and customary closing conditions.
Cypress shares vaulted $4.12, or 23.1%, to $21.94