Cypress To Buy Spansion For $1.59 Bln In Stock

(RTTNews) - Programmable chip maker Cypress Semiconductor Corp. (CY) has agreed to buy Spansion, Inc. (CODE) in an all-stock deal that values the memory chip maker at about $1.59 billion.

Under the deal, which is expected to to close in the first half of 2015, Spansion shareholders will receive 2.457 Cypress shares for each Spansion share they own. Based on Cypress's closing price of $10.43 on Monday, the deal valued Spansion at $25.63 per share, a 12.2% premium to the company's closing price of $22.85.

The shareholders of each company will own about 50% of the post-merger company, which will be headquartered in San Jose, California and called Cypress Semiconductor Corp.

The combined company will have an eight-person board of directors, comprising four each from Cypress and Spansion. Cypress Chief Executive Officer T.J. Rodgers will be CEO and Spansion Chairman Ray Bingham will be nonexecutive chairman of the combined company, which will have annual revenue of more than 2 billion.

The merger, which is valued at about $4 billion, is expected to generate more than $135 million in cost savings annually within three years and to be accretive to adjusted earnings within the first full year after the deal closes.

The combined company will continue to pay $0.11 per share in quarterly dividends to shareholders.

Sunnyvale, California-based Spansion, a former joint venture between Advanced Micro Devices, Inc. (AMD) and Japan's Fujitsu Ltd., makes flash memory, microcontrollers, mixed-signal and analog products. The company filed for Chapter 11 bankruptcy protection in early 2009, but it reorganized and its shares began trading again on the New York Stock Exchange on June 22, 2010.

Cypress Semiconductor is a Silicon Valley-based semiconductor design and manufacturing company founded by T. J. Rodgers and others from AMD.

Cypress shares are currently gaining 11.70% in after hours trading after closing the day's regular trading session at $10.43, down 17 cents or 1.60%. Spansion shares are currently gaining 14.31% in extended hours trading after closing the day's reguar trading session at $22.85, down 52 cents or 2.23%.