Infineon acquires Cypress Semiconductors in €9.0bn deal

German semiconductor manufacturer Infineon agreed to acquire US firm Cypress Semiconductors in a deal worth €9bn, including debt.

Infineon's cash offer of $23.85 per share represented a 46% premium to Cypress' share price over the last month.

The Neubiberg-based chipmaker said it will target cost synergies of roughly €180m per year by 2022 and long-term revenue synergies of more than €1.5bn, while targeting the automotive, industrial and Internet of Things segments.

Infineon also intends to finance approximately 30% of the total transaction value with equity, with the remainder to be satisfied via debt and cash held on hand.

Chief financial officer Sven Schneider said on Monday that the cost and revenue synergies meant the "transaction makes a lot of sense."

Schneider also said the acquisition would "strengthen the link between the real and the digital world," noting that Infineon would become the eighth-largest semiconductor company in the world as a result of the transaction and would now target €10bn per year in revenues.

Cypress saw annual revenue, helped by an acquisition, more than double over the last five years to reach $2.5bn in 2018. However, analysts were predicting that sales growth would evaporate this year, shrinking by about 11%.

The transaction was seen contributing to earnings starting from the first full year after and to close by the end of calendar year 2019 or the start of 2020.

As of 1230 BST, Cypress shares were ahead 24.86% in pre-market trading at $22.25 each, while those of Infineon were trading 6.94% lower at €14.97 each.