Shares of Cypress were gaining 4.2% to $10.87 in after-hours trading following the announcement.
Under the agreement Spansion shareholders will receive 2.457 shares of Cypress for each share of Spansion they hold. Shareholders of each company will own about 50% of the merged company, which will take the Cypress Semiconductor name.
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The combined company will generate more than $2 billion in revenue annually, and will be the number one manufacturer of NOR Flash and SRAM memory, according to Cypress. The combined company plans to pay a quarterly dividend of 11 cents a share to shareholders.
Cypress and Spansion expect the deal to close sometime in the first half of 2015.
TheStreet Ratings team rates SPANSION INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate SPANSION INC (CODE) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its solid stock price performance, increase in net income and robust revenue growth. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and weak operating cash flow."