Infineon Technologies has agreed to buy Cypress Semiconductor in a deal that values the chip maker at $10 billion.
Infineon is paying $23.85 per share in cash ($10 billion enterprise value, counting debt) in addition to continuing its dividend through closing. That’s 55 percent higher than the stock price was last week before the news started to leak.
The deal shows that trend toward consolidation of the chip industry — which has swallowed many Silicon Valley companies from Altera to NXP — is continuing.
The stock price represents an-all time high for Cypress, and it’s a nice way for a legendary Silicon Valley to go out in style.
Cypress was founded in 1982 by T.J. Rodgers, a Green Bay Packers fan who was also brilliant chip engineer. He helped Cypress rise from an also-ran to a skilled maker of a wide variety of memory, sensor, and Internet of Things chips.
Above: T.J. Rodgers of Cypress Semiconductor
Early to recognize the value of improved solar cells made from silicon, Rodgers invested in SunPower in 2002 and later helped it launch an initial public offering in 2005. Cypress got a big return on that deal.
But Cypress was known for its larger-than-life founder, who said outrageous things (like “real men have fabs”) and yet was known as a smart and fiercely independent libertarian. Regarding fabs, or wafer fabrication plants (chip factories), Rodgers was adamant that owning your own factories was the path to success in semiconductors. (That eventually proved to be wrong). Rodgers’ firm grew to thousands of employees.
Rodgers stepped down in 2016 and was replaced by but he was an activist shareholder within Cypress. He set a personal goal of creating the best pinot noir in the world at his vineyard in the Santa Cruz Mountains. I walked through his vineyard once, when it was equipped with some of the early monitoring equipment for the internet of things. We laughed as he told tales of getting the Cypress staff to (voluntarily) come pick his grapes.
In the 1980s and 1990s, Rodgers was known as the toughest boss in Silicon Valley, always holding executives and employees accountable. He said he liked corporations to set “big, hairy, audacious goal,” or BHAGs, so they could always achieve higher results. When I was still at the San Jose Mercury News,
At the time of the acquisition, Cypress was valued at 18.2 times NTM EBITDA ( a measure of profitability).
The companies expect the transaction to close by the end of 2019 or early 2020.
https://venturebeat.com/2019/06/02/infineon-acquires-cypress-semiconductor-in-deal-valued-at-10-billion/
2019-06-03 05:52:18Z
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