Infineon to acquire Cypress, strengthening and accelerating its path of profitable growth
- Infineon CEO Ploss: "Landmark step in Infineon's strategic development. We will be able to offer our customers the most comprehensive portfolio for linking the real with the digital world." - Combination of highly complementary technology portfolios opens up great potential in high-growth target markets automotive, industrial and Internet of Things (IoT) - Infineon to pay US$23.85 per Cypress share, equivalent to a total enterprise value of €9.0 billion - Transaction expected to yield €180 million in cost synergies per annum by 2022 and more than €1.5 billion annual revenue synergies in the long-term - Transaction expected to be accretive to earnings beginning in the first full year after closing and to close by end of calendar year 2019 or early 2020 - Future target operating model after integration: 9+ percent revenue growth, 19 percent segment result margin and 13 percent investment-to-sales ratio MUNICH, Germany and SAN JOSE, Calif., June 3, 2019 /PRNewswire/ -- Infineon Technologies AG (FSE: IFX / OTCQX: IFNNY) and Cypress Semiconductor Corporation (NASDAQ: CY) today announced that the companies have signed a definitive agreement under which Infineon will acquire Cypress for US$23.85 per share in cash, corresponding to an enterprise value of €9.0 billion. Reinhard Ploss, CEO of Infineon, said: "The planned acquisition of Cypress is a landmark step in Infineon's strategic development. We will strengthen and accelerate our profitable growth and put our business on a broader basis. With this transaction, we will be able to offer our customers the most comprehensive portfolio for linking the real with the digital world. 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. We look forward to welcoming our new colleagues from Cypress to Infineon. Together, we will continue our shared commitments to innovation and focused R&D investments to accelerate technology advancements." Hassane El-Khoury, President and CEO of Cypress, said: "The Cypress team is excited to join forces with Infineon to capitalize on the multi-billion dollar opportunities from the massive rise in connectivity and computing requirements of the next technology waves. This announcement is not only a testament to the strength of our team in delivering industry-leading solutions worldwide, but also to what can be realized from uniting our two great companies. Jointly, we will enable more secure, seamless connections, and provide more complete hardware and software sets to strengthen our customers' products and technologies in their end markets. In addition, the strong fit of our two companies will bring enhanced opportunities for our customers and employees." Steve Albrecht, Chairman of the Board of Directors of Cypress, said: "For the past three years, our Cypress 3.0 strategy has delivered tremendous results and restructured the entire organization to focus on markets that matter. After receiving interest from several companies, we entered into a transaction that is a testament to our team's strategy and hard work. For Cypress shareholders, the combination of continued dividends through closing plus the US$23.85 cash price represents significant value creation. This transaction will create product opportunities that are increasingly important in the competitive automotive, industrial, and consumer markets. As Board members, we are grateful for Cypress's outstanding management team, led by Hassane El-Khoury." More robust positioning in high-growth markets With the addition of Cypress's strong R&D and geographical presence in the U.S, Infineon not only strengthens its capabilities for its major customers in North America, but also in other important geographical regions. The company adds to its R&D presence in Silicon Valley and gains presence, as well as market share, in the strategically important Japanese market. At the same time, Infineon aims to achieve significant economies of scale, making Infineon's business model even more resilient. Based on pro forma revenues of €10 billion in FY 2018, the transaction will make Infineon the number eight chip manufacturer in the world. In addition to its already leading position in power semiconductors and security controllers, Infineon will now also become the number one supplier of chips to the automotive market. Improved financial strength following full integration Upon successful integration, Infineon will adapt its target operating model accordingly. Then, the company targets through-cycle revenue growth of 9+ percent and a segment result margin of 19 percent. The investment-to-sales ratio is targeted to decrease to 13 percent. Transaction details Cypress expects to continue its quarterly cash dividend payments until the transaction closes. This includes Cypress's previously announced quarterly cash dividend of US$0.11 per share, payable on July 18, 2019 to holders of record of Cypress's common stock at the close of business on June 27, 2019. The funding of the acquisition is fully underwritten by a consortium of banks. Infineon is committed to retaining a solid investment grade rating and, consequently, Infineon intends to ultimately finance approximately 30 percent of the total transaction value with equity and the remainder with debt as well as cash on hand. The financial policy to preserve a strategic cash reserve remains in place. The acquisition is subject to approval by Cypress's shareholders and the relevant regulatory bodies as well as other customary conditions. The closing is expected by the end of calendar year 2019 or early 2020. Credit Suisse and J.P. Morgan acted as lead financial advisors to Infineon. Bank of America Merrill Lynch also acted as financial advisor. All three banks acted as structuring banks in addition to providing committed financing for the transaction, Bank of America Merrill Lynch in the lead. Kirkland & Ellis LLP and Freshfields Bruckhaus Deringer LLP are acting as legal advisors to Infineon. Morgan Stanley is acting as exclusive financial advisor to Cypress, and Simpson Thacher & Bartlett LLP is serving as legal counsel. Analyst telephone conference and press telephone conference Contacts Sian Cummings, Head of Communications, Infineon Americas Colin Born Ann Minooka About Infineon Further information is available at www.infineon.com Follow us: Twitter - Facebook - LinkedIn About Cypress To learn more, go to www.cypress.com. DISCLAIMER This announcement does not constitute or form part of, and should not be construed as, an offer of, a solicitation of an offer to buy, or an invitation to subscribe for, underwrite or otherwise acquire, any securities of the Infineon Technologies AG, the Cypress Semiconductor Corp. or the securities of any existing or future member of the Cypress group (the "Cypress Group") or the Infineon Technologies AG group (the "Infineon Technologies Group"). Neither this announcement nor any part of it form the basis of, nor should any of them be relied on in connection with, any voting decisions to be taken by shareholders of either Cypress or Infineon Technologies AG, any offer to purchase or sell, or contract to purchase or sell, any securities of Cypress or Infineon Technologies AG, any member of the Cypress Group or Infineon Technologies Group, or with any other offer, contract or commitment whatsoever. This announcement does not constitute shareholder voting or proxy information, a proxy, an offer to purchase, or prospectus, in whole or in part, and any decision with respect to the manner in which to vote on any corporate or shareholder action or sell or purchase any securities should not be made on the basis of the information contained in this announcement, and should be made solely on the basis of the information to be contained in the relevant document and on an independent analysis of the information contained therein. Infineon Technologies AG`s securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "Securities Act"), and may not be offered or sold in the United States absent registration or an exemption from registration under the Securities Act. The Financial Advisors are acting exclusively for Infineon Technologies AG and for no-one else in connection with or in respect of the transactions referred to in this announcement and will not regard any other person (whether or not a recipient of this presentation) as a client in relation to these transactions and will not be responsible to any other person for providing the protections afforded to their respective clients, or for advising any such person on the contents of this announcement or in connection with any transaction referred to in this announcement. The contents of this announcement have not been verified by any of the Financial Advisors or any of their affiliates. This announcement includes "'forward-looking statements." These statements contain the words "anticipate," "believe," "intend," "estimate," "expect", "expected" ""target", "aims", "will" and words of similar meaning. All statements other than statements of historical facts included in this announcement, including, without limitation, those regarding Infineon Technologies AG's financial position, business strategy, expected financial impact of the acquisition (including cost and revenue synergies), plans and objectives of management for future operations (including cost savings and productivity improvement plans) are forward-looking statements. By their nature, such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of Infineon Technologies AG to be materially different from results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Infineon Technologies AG's present and future business strategies and the market environment in which Infineon Technologies AG will operate in the future. The factors that could cause actual results to differ materially include the following: the risk that Infineon Technologies AG may be unable to achieve the expected synergies, benefits or financial impact from the acquisition within the expected time-frames (or at all); the risk that Infineon Technologies AG will not be able to successfully integrate Cypress's operations into those of Infineon Technologies AG, such integration may be more difficult, time-consuming or costly than expected; revenues following the transaction may be lower than expected; operating costs, customer loss and business disruption (including difficulties in maintaining relationships with employees, customers or suppliers) may be greater or more significant than expected following the transaction; the impact of higher levels of debt incurred by Infineon Technologies AG in connection with the transaction and the potential impact on the rating of indebtedness of Infineon Technologies AG and the risk that deleveraging may take longer than expected; the risk that the acquisition is subject to conditions and that there is no assurance that Infineon Technologies AG will be able to complete the acquisition on a timely basis or all; currency risk in respect of the consideration payable by Infineon Technologies AG in connection with the acquisition; These forward-looking statements speak only as of the date of this presentation. Each of Infineon Technologies AG, the relevant Infineon Technologies Group entities, Financial Advisors and their respective affiliates, agents, directors, officers, employees and advisers, expressly disclaims any obligation or undertaking to update any forward-looking statements contained herein. You are urged to consider these factors carefully in evaluating the forward-looking statements in this announcement and not to place undue reliance on such statements. Cautionary Note Regarding Forward Looking Statements of Cypress Therefore, caution should be taken not to place undue reliance on any such forward-looking statements. Cypress assumes no obligation (and specifically disclaim any such obligation) to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. For additional discussion of potential risks and uncertainties that could impact Cypress' results of operations or financial position, refer to Part I, Item 1A. Risk Factors in Cypress' Annual Report on Form 10-K for the fiscal year ended December 30, 2018 and Part II, Item 1A. Risk Factors in Cypress' Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2019 and any subsequent filings with the U.S. Securities and Exchange Commission (the "SEC"). Additional Information Regarding Cypress and Where to Find It In addition, Cypress' stockholders may obtain free copies of the documents Cypress files with the SEC through the Investors portion of Cypress' website at investors.cypress.com under the link "Financials & Filings" and then under the link "SEC Filings" or by contacting Cypress' Investor Relations Department by (a) mail at Cypress Semiconductor Corporation, Attention: Investor Relations, 198 Champion Ct., San Jose, CA 95134, (b) telephone at (408) 943-2600, or (c) e-mail at investorrelations@cypress.com. Cypress and certain of its executive officers, directors, other members of management and employees, may under the rules of the SEC, be deemed to be "participants" in the solicitation of proxies from Cypress' stockholders in connection with the proposed transaction. Information regarding the persons who may be considered "participants" in the solicitation of proxies will be set forth in Cypress' preliminary and definitive proxy statements when filed with the SEC and other relevant documents to be filed with the SEC in connection with the proposed transaction, each of which can be obtained free of charge from the sources indicated above when they become available. Information regarding certain of these persons and their beneficial ownership of Cypress' common stock is also set forth in Cypress' definitive proxy statement on Schedule 14A for its 2019 annual meeting of stockholders filed on March 15, 2019 with the SEC, which can be obtained free of charge from the sources indicated above. View original content:http://www.prnewswire.com/news-releases/infineon-to-acquire-cypress-strengthening-and-accelerating-its-path-of-profitable-growth-300860412.html SOURCE Infineon Technologies AG; Cypress Semiconductor Corporation |
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