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ISSI-Cypress deal: Yes or no?

Posted: 15 Jun 2015     Print Version  Bookmark and Share

Keywords:antitrust  merger  acquisition 

Early last week, Integrated Silicon Solution Inc. (ISSI) halted its transaction with Cypress over antitrust concerns. However, by Wednesday, it approved of Cypress' terms for the $643 million deal to push through.

Will they or won't they? That is the question.

ISSI said in a statement that it had "determined in good faith ... that the current Cypress offer would be more favourable from a financial point of view to the ISSI stockholders than the merger under the Uphill Agreement [a prior agreement with Uphill Investment Co.] and that the failure to enter into a definitive agreement with Cypress on the terms in the current Cypress offer would reasonably be expected to be inconsistent with its fiduciary duties under Delaware Law." This was despite concerns that it and Cypress would have to make antitrust filings for the transaction in the United States and Germany and possibly other jurisdictions, which would be both expensive and time-consuming.

But hold on.

While Cypress and ISSI briefly reunited on the dance floor on Wednesday, Thursday it released a statement announcing it had entered into a further amendment to its previously announced merger agreement with Uphill Investment Co. The amendment means the merger consideration was increased to $21 per share in cash, from the $20 per share in cash first offered in March. ISSI also announced that its special meeting of stockholders to consider approval of the Uphill acquisition and related matters will be held on June 19, 2015 at 2:00 p.m. Pacific Time.

ISSI had entertained the Cypress offer per the original Uphill agreement that it would consider a superior offer. Now that the Uphill agreement has been amended, trumping the Cypress offer of $20.25 per share, the ISSI Board of Directors continues to recommend that ISSI's stockholders vote for the adoption of the Uphill Agreement, having determined the proposal from Cypress no longer constitutes and would not be reasonably expected to lead to a superior proposal.

ISSI was founded in 1988 and is based in Milpitas, California, with offices in China, Europe, Hong Kong, India, Japan, Korea, Singapore and Taiwan. The company, which went public in 1995, designs and develops high-speed and low-power SRAM and low- and medium-density DRAM and NOR flash products for the automotive, communications, digital consumer, industrial and medical markets. Customers include Panasonic, Alcatel-Lucent, Cisco Systems, Motorola, Samsung, Sharp, Sony, Toshiba, GE, Honeywell and Siemens.

ISSI products

Based in California, ISSI products include SRAM, DRAM and NOR flash with a focus on the automotive, communications, digital consumer, industrial and medical markets.

The potential merger of Cypress and ISSI first came to light in mid-May when Cypress sent a letter to the board of directors of ISSI, proposing an acquisition of all outstanding shares. Had the Cypress/ISSI merger come to fruition, it would have bolstered Cypress' offerings in the automotive segment, which is growing thanks in part to on-board infotainment systems.

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