No ISSI for Cypress
TORONTO — Cypress Semiconductor’s latest acquisition ambitions have been stopped due to anti-trust concerns.
Integrated Silicon Solution, Inc. (ISSI) announced (June 8) in a statement that Cypress Semiconductor, despite having nearly fully negotiated the agreement, failed to finalize the merger agreement because of outstanding antitrust issues. Although Cypress was able to complete extensive due diligence and hold numerous meetings with ISSI’s management team, the only remaining point of difference was the treatment of the antitrust risks of the transaction, which ISSI said would present significant antitrust risks in both the U.S. and Germany, and that it would be unlikely to close. ISSI determined that anti-trust filings for the transaction would be required in the U.S. and Germany and possibly other jurisdictions.
In the U.S., both the Federal Trade Commission and the Department of Justice have 30 days to review a filing and determine whether to issue the parties a burdensome subpoena for documents and information. This “second request” is rather likely as Cypress and ISSI are head-to-head competitors with significant market share in the SRAM market, the latter said in its statement, and could cost each party more than $3 million. It could also take up to nine months to complete, and result in divestiture of at least a portion of the SRAM business. In Germany, ISSI believes the combined market share of Cypress and ISSI would exceed 70% and that the combined company would be the sole supplier of SRAM to German automotive manufacturers.
ISSI’s statement that the merger would not go forward came right on the heels of Cypress sharing a financing commitment letter to ISSI from Barclays Bank PLC that in announced in a press release, stating it “can now confirm it has received a financing commitment letter on competitive terms from Barclays and shared the letter with ISSI. This financing commitment further strengthens Cypress’s offer and demonstrates Cypress’s determination to close a transaction.”