Infineon Acquires Cypress Semiconductor Following a Security Review of the $10 Billion Deal
There were strong concerns regarding whether the merger between Infineon and Cypress Semiconductor would actually go through after an announcement that the transaction would be subjected to a U.S. national security review.
Infineon initially announced their intentions to acquire Cypress Semiconductor on June 2, 2019. The companies signed a definitive agreement that day for Infineon to acquire Cypress for US$23.85 per share in cash.
The motivation behind the acquisition on Infineon’s side was, “to strengthen and accelerate profitable growth,” and to offer customers a more comprehensive portfolio, as well as the potential to grow their automotive, industrial, and IoT company sectors.
Results of the U.S. Security Review
The transaction was placed on somewhat of a temporary hold when U.S. national security officials became involved with the deal and recommended the U.S. administration to block the attempted merger.
On March 9, 2020, Infineon announced that the Committee on Foreign Investment in the United States (CFIUS) concluded their security review of the planned acquisition and had cleared it to proceed, determining that, “there are no unresolved national security concerns” with the merger.
Promotional image including Infineon and Cypress Semiconductor logos and the slogan for their merger. Image used courtesy of Infineon.
Why the Need for a Security Review?
U.S. security officials extended their recommendation to block the transaction, citing concerns that the deal would result in a national security risk. It’s speculated that officials advocated for caution and the need for a security clearance due to Infineon’s significant presence and business dealings in China.
What’s Next with the Merger?
Infineon stated the closing of the merger is still subject to approval from China’s State Administration for Market Regulation (SAMR) and other customary closing conditions under their agreement.
Infineon has previously expressed its hopes that the merger will lead it to a leading position as a semiconductor supplier, offering a broader range of products and applications and accelerate its overall growth in the upcoming years.
The closing for the acquisition was initially planned for the end of 2019 or early 2020.