Proving the Business Case for the Internet of Things

Cypress and Spansion to target IoT in $4 billion merger

Iain Morris
December 4, 2014
 
Memory chip makers Cypress and Spansion have unveiled plans for a $4 billion merger aimed at creating a global leader in memory markets.

The new entity will be in a better position to develop new products for automotive, Internet of Things, industrial and communications markets, said the companies.

The post-merger company should generate more than $2 billion in annual revenues and have a leading position in the markets for microcontrollers and specialized memories that are needed in today’s embedded systems.

“This merger represents the combination of two smart, profitable, passionately entrepreneurial companies that are number one in their respective memory markets and have successfully diversified into embedded processing,” said TJ Rodgers, Cypress’s founding president and chief executive. “Our combined company will be a leading provider of embedded MCUs [microcontroller units] and specialized memories.”

“We will also have extraordinary opportunities for EPS accretion due to the synergy in virtually every area of our enterprises,” added Rodgers.

Under the terms of the agreement, Spansion (Sunnyvale, CA, USA) shareholders are to receive 2.457 Cypress (San Jose, CA, USA) shares for each Spansion share they own.
The transaction will mean that shareholders of each company own about 50% of the post-merger company after the deal has gone through.

The merger is expected to realize more than $135 million in annual cost savings over three years and to be “accretive” to earnings in the first full year after the transaction closes.

“Bringing together these high-performing organizations creates operating efficiencies and economies of scale, and will deliver maximum value for our shareholders, new opportunities for employees and an improved experience for our customers,” said John Kispert, Spansion’s chief executive.

“With unparalleled expertise, global reach in markets like Japan and market-leading products for automotive, IoT, industrial and communications markets, the new company is well positioned to deliver best-of-breed solutions and execute on our long-term vision of adding value through embedded system-on-chip solutions,” added Kispert.
 
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