Infineon, Europe's biggest semiconductor group, said it would pay $23.85 per share for Cypress, a major supplier of Wi-Fi/Bluetooth connectivity chips for cars, home electronics and IoT devices, a 33.8% premium to its Friday closing price.
Infineon said that deal would ultimately increased it revenue potential by around 9%, and boost annual cost savings synergies to around €180 each year by 2020. Infineon will finance around a third of the deal with its existing equity, with the remainder coming from cash and debt.
"The planned acquisition of Cypress is a landmark step in Infineon's strategic development," said CEO Reinhard Ploss. "We will strengthen and accelerate our profitable growth and put our business on a broader basis."
Infineon shares were marked 4.6% lower in the opening minutes of trading in Frankfurt following the deal news to change hands at €15.33 each, a move that would extend the stock's year-to-date decline to around 12%.
Cyrpress shares spiked last week amid reports it had considered takeover interest, and has risen nearly 40% so far this year, giving the company a market value of $6.51 billion. The shares were marked 23.8% higher Monday to change hands at $22.07 each.
"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," said CEO Hassane El-Khoury. "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."