NEW YORK (TheStreet) -- Spansion (CODE) shares are climbing, up 22.5% to $28 in early market trading on Tuesday, after the flash memory chip maker agreed to a merger with fellow Silicon Valley chip maker Cypress Semiconductor (CY) that values Spansion at about $1.6 billion.
Spansion shareholders will receive 2.457 shares of Cypress for every share of Spansion that they hold, giving shareholders of both companies an even split on the amount of shares owned of the new company by each side. The merged company will keep the Cypress Semiconductor name
Spansion generated $972 million in revenue last year while Cypress generated $723 million in revenue in 2013. The merged company expects to generate revenue north of $2 billion annually, according to a joint statement released by the companies yesterday.
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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."