Cypress Semiconductor Corporation
) has raised its all-cash bid to buy all of
Ramtron International Corp.'s
) outstanding stock for $2.88 per share, a 59% premium to Ramtron's
closing price of $1.81 as of June 11. This new offer would
translate into a purchase price of about $109 million.
The revised offer will expire on September 11, 2012. It was earlier
scheduled to expire on August 24, 2012. However, all other terms
and conditions of the offer remain unchanged.
This is Cypress' fourth attempt in two years to take over its peer
Ramtron. The initial offer of $2.48 per share was raised to $2.68
per share in July, representing a purchase price of about $95
million. The offer was declined by Ramtron, which stated that it
was inadequate and not in the best interest of its shareholders.
Ramtron International is a fabless semiconductor company with about
35.0 million shares outstanding. It supplies ferroelectric random
access memories and has
Texas Instruments Inc
) and Toshiba Corp. as manufacturing partners. In the second
quarter of 2012, Ramtron reported revenue of $14.2 million with a
net profit of $69,000.
We believe the deal could make sense for Cypress for a number of
reasons. First, Ramtron is a fabless company and would fit very
well into Cypress' low capex manufacturing strategy. Being a
fabless company, Ramtron relies on partners for manufacturing,
assembly and testing of products that offer superior technology and
services at competitive prices
Second, Ramtron's ferroelectric-RAM (F-RAM) would supplement
Cypress' Memory Products Division, which includes Asynchronous
SRAMs, Synchronous SRAMs and nvSRAMs, and provide a longer-term
roadmap for its non-volatile memory market. Ramtron's F-RAM enables
read-writes with very little delay, low power consumption, and high
endurance with limited memory loss.
The F-RAM is also competitive with some of the newer
technologies such as Phase-change-RAM. The Memory Products Division
segment generated 41% of revenue in the second quarter and was up
1.3% sequentially. The sequential increase came on the back of
strong demand in the static random access memory (SRAM) business.
ATMEL CORP (ATML): Free Stock Analysis Report
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The impact of the deal on Cypress' financials is unknown but it
will definitely bring synergies on the sales side.
Cypress is a semiconductor company offering high-performance, mixed
signal, programmable solutions. In the second quarter, Cypress
reported earnings of 5 cents, beating the Zacks Consensus Estimate
of 3 cents. Higher touch sales, improved gross margins and tight
operating expense control contributed to the upside in earnings.
Recently, the company also announced that its board of directors
has approved a quarterly cash dividend of 11 cents per share
payable on October 18, 2012. The regular dividend payments are a
good way of encouraging investor confidence as it returns
Cypress operates in a highly competitive market. In the touchscreen
market, the company competes with
Currently, Cypress has a Zacks #3 Rank, implying a short-term Hold