Cypress Semiconductor Corporation
) revised bid to buy all of
Ramtron International Corp.
) outstanding stock was rejected yet again.
This was Cypress' third attempt in two years to take over its
peer Ramtron International. The initial bid of $2.48 per share was
raised to $2.68 per share, representing a purchase price of about
$95 million. Ramtron declined the revised offer, stating that it
was inadequate and not in the best interest of its
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 first quarter
of 2012, Ramtron reported revenue of $15.0 million with a net
profit of $445,000.
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 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 research and development 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 minimum delay, low power consumption, and
high endurance with limited memory loss.
The F-RAM is also competitive with newer technologies such as
Phase-change-RAM. Ramtron's 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.
If the deal materializes, it would definitely bring synergies on
the sales side of Cypress.
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
backed 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 turnaround in the current quarter.
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
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