German chipmaker Infineon announced Monday plans to acquire U.S. rival Cypress for around nine billion euros ($10.1 billion). The firm is aiming to grab the number-eight spot in the industry with this acquisition and seeks to further extend its services into the Internet of Things.
Infineon revealed in a statement it came to an agreement to pay $23.85 per share in cash for Cypress.
"With this transaction, we will be able to offer our customers the most comprehensive portfolio for linking the real with the digital world," Infineon chief executive Reinhard Ploss said.
"This will open up additional growth potential in the automotive, industrial and Internet of Things sectors," he added.
Expanding into the Internet of Things
Infineon areas of expertise are power semiconductors, sensors, and security solutions but with this new acquisition, the firm will seek to expand into the Internet of Things. Cypress acquired the Internet of Things division of Qualcomm in 2016.
"Combining these technology assets will enable comprehensive advanced solutions for high-growth applications such as electric drives, battery-powered devices and power supplies," they said in the joint statement.
The acquisition is expected to bring €180 million in cost savings per year by 2022. Furthermore, Infineon added that the deal is expected to produce a revenue growth of at least 9 percent.
"Jointly, we will enable more secure, seamless connections, and provide more complete hardware and software sets to strengthen our customers’ products and technologies in their end markets. In addition, the strong fit of our two companies will bring enhanced opportunities for our customers and employees," said Hassane El-Khoury, President and CEO of Cypress.
Infineon also added that the acquisition will make it the world's number eight chip manufacturer.