NEW YORK (TheStreet) -- Shares of Cypress Semiconductor (CY) and Spansion (CODE) are soaring 15.10% to $12.01 and 22.19% to $27.92 respectively, after a merger of the two companies was reported for about $1.6 billion in stock, creating a company that will supply chips for products including cars and consumer electronics, Bloomberg said.
The merger of the San Jose-based semiconductor company with Spansion, a Sunnyvale-based flash memory-based embedded systems solutions company, provides "profitable scale with best-in-class operational management," Pacific Crest analysts said.
Pacific Crest upgraded Cypress Semiconductor to "outperform" from "sector perform" today with a price target of $15, following the announcement of the merger.
"The merged entity would represent a leading provider of embedded MCUs and specialized memories and would have very little overlap as its products are highly complementary. The transaction is expected to close in 1H15 and to generate more than $135 million in cost synergies," analysts added.
Shares of Cypress Semiconductor are trading with heavy volume. About 2.82 million shares had changed hands by 10 a.m. in New York, compared to an average of 2.29 million.
Shares of Spansion are also trading with heavy volume. About 2.15 million shares had changed hands by 10 a.m. in New York, compared to the average of 1.53 million.