Cypress Semiconductor Corporation
(
CY
) has raised its all-cash bid to buy all of
Ramtron International Corp.'s
(
RMTR
) outstanding stock for $2.68 per share, a 48% premium to Ramtron's
closing price of $1.81 on June 11. This new offer would represent a
purchase price of about $95 million.
Ramtron International is a fabless semiconductor company with about
35.0 million shares outstanding. It supplies ferroelectric random
access memories and has T
exas Instruments Inc.
(
TXN
) and Toshiba Corp. as manufacturing partners. In the first quarter
of 2012, Ramtron reported revenue of $15.0 million with a net
profit of $445,000.
This is Cypress' third attempt in two years to take over its peer
Ramtron International. Earlier this month, Cypress offered about
$87.6 million or $2.48 per share for the purchase, which was
Ramtron turned down because it wanted to explore more options,
including a sale. Since then, Ramtron's stock has jumped more than
50%. (Ramtron had rejected Cypress's March 2011 offer of $3.01 per
share).
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 has the flexibility to move the
manufacturing, assembly and testing of products to vendors that
offer superior technology and services at competitive prices. It
also frees up resources for R&D activity that would otherwise
have been locked up in capital assets.
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
fast 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 44% of revenue in the first quarter and was down
9.1% sequentially due to inventory adjustments and lower demand
from major SRAM wireless customers.
The impact of the deal on Cypress' financials is unknown but will
definitely bring synergies on the sales side.
Cypress is a semiconductor company offering high-performance, mixed
signal, programmable solutions. Though the broader semiconductor
industry was hit late last year by a slowdown in demand, Cypress
had reported double-digit percentage sales growth bolstered by
strong demand for its touchscreen controllers used in smartphones
and tablet computers. Touch sales disappointed in the last quarter,
resulting in a quarterly loss of 5 cents per share. Management
expects a rebound in the current quarter.
Cypress operates in a highly competitive market. In the touchscreen
market, the company competes with
Atmel Corporation
(
ATML
) and
Synaptics
(
SYNA
).
Currently, Cypress has a Zacks #3 Rank, implying a short-term Hold
recommendation.
ATMEL CORP (ATML): Free Stock Analysis Report
CYPRESS SEMICON (CY): Free Stock Analysis
Report
RAMTRON INTL CP (RMTR): Free Stock Analysis
Report
SYNAPTICS INC (SYNA): Free Stock Analysis
Report
TEXAS INSTRS (TXN): Free Stock Analysis Report
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