18 Apr 2024, Edition - 3201, Thursday
Infineon Technologies AG Completes Acquisition of Cypress Semiconductor Corporation
by businesswireindia.com
April 17, 2020
Business Wire IndiaInfineon Technologies AG
(FSE: IFX /
OTCQX: IFNNY) announced today the
Closing of the
acquisition of Cypress Semiconductor Corporation. The San José-based company has
become part
of Infineon effective as
of the Closing.
“The
acquisition of Cypress is a
landmark step in
Infineon’s strategic development,” said
Infineon CEO
Reinhard Ploss. “Together, we offer our customers
the industry’s most
comprehensive portfolio for
linking the real
with the
digital world and
shaping digitalization, one of the
most important
global trends.
We serve as a
trusted partner for
customers and
distributors and we are
evolving from a
leader in components to a
leader in system solutions for the
automotive, industrial
and IoT markets. Furthermore, customers can benefit from our increased
global reach and
enhanced design-in
support tailored to
their needs. We welcome our new
colleagues from Cypress to
Infineon.”
The addition of Cypress lets
Infineon further
strengthen its
focus on structural
growth drivers and on a
broader range of applications. This
will accelerate
the company’s path of profitable growth. Cypress adds a
differentiated portfolio of microcontrollers, connectivity components, software ecosystems
and high- performance memories. All this is
highly complementary to Infineon’s leading
power semiconductors, automotive microcontrollers, sensors and
security solutions. Combining these technology assets enables advanced solutions for
high-growth applications such as
ADAS/AD, IoT and 5G mobile
infrastructure. The
addition of Cypress’ strong R&D
capabilities and its
foothold in
the U.S. and Japan strengthen Infineon’s connections with customers around the world.
Financial rationale of the merger confirmed
On 3
June 2019,
Infineon and Cypress announced that the companies had signed a
definitive agreement under which Infineon
would acquire Cypress for
US$23.85 per
share in
cash, corresponding to an
enterprise value of €9.0 billion. The
transaction has been approved by the Cypress
shareholders and all
required regulatory clearances
have been obtained.
The acquisition is
expected to be accretive to
earnings in
the 2021 fiscal year. The
profitability is
expected to
rise while capital intensity of the combined business will decrease, increasing free
cash flow. We expect annual cost synergies of €180 million
gradually ramping up
over approximately three
years after Closing. The
complementary portfolios
will enable
the offering of additional chip solutions
with a
revenue synergy potential
of more
than €1.5 billion per
annum in
the long term.
The acquisition makes Infineon one
of the
world's top 10
semiconductor manufacturers. Already a leader
in power semiconductors and security controllers, Infineon is now also
becoming the number one semiconductor supplier to
the automotive industry.
Stable and long-term refinancing structure
The acquisition is
initially funded
through a
combination of cash on
hand and a
committed acquisition financing facility
provided by a
consortium of 20
national and
international banks. With maturities ranging from March
2022 until June 2024 for
individual tranches, the
acquisition facility
provides ample
time and flexibility for long-term refinancing measures to arrive at
the target capital structure.
Infineon is
committed to retaining an investment grade rating and
therefore, unchanged from the
initial announcement, Infineon intends to ultimately finance
approximately 30 percent
of the
total transaction with equity. With the share placement and the issuance
of the
hybrid bond in
2019 Infineon has
already done significant steps towards achieving the
desired quantum.
Given current macro
uncertainties caused by the
coronavirus pandemic, a
solid balance sheet
and a strong
liquidity position are
key. To
this end, Infineon will keep
liquidity corresponding to its
target level of €1
billion plus at
least 10 percent of sales. Furthermore, a
consistent deleveraging path
will be pursued in order to
bring the ratio
of gross financial
debt to
EBITDA back
to its
target value of maximum 2.0x over the mid-term.
Source: Businesswire