Yahoo Finance Infineon, Cypress Shares Jump After Deal Wins CFIUS Clearance
(Bloomberg) -- Infineon Technologies AG’s $8.7 billion acquisition of Cypress Semiconductor Corp. was approved by the Committee on Foreign Investment in the United States, a small step forward for deals in an industry where regulatory and security concerns have stalled consolidation. Shares of both companies surged.“CFIUS has completed its review of Cypress’s previously announced merger transaction with Infineon Technologies AG and determined that there are no unresolved national security concerns,” Cypress said in a statement Monday. Infineon, based in Munich, also confirmed the approval.
The combination still needs sign-off from China’s State Administration for Market Regulation, the companies said.
“The most critical hurdle to overcome was CFIUS,” said Holger Schmidt, an analyst at Metzler. “While China pretty much killed the Qualcomm/NXP deal it is important to remember that was in the midst of the trade war between the US and China.” Schmidt added he’s “cautiously optimistic” that the Infineon deal will be approved.
Shares of San Jose, California-based Cypress surged more than 40% in extended trading following the announcement. Infineon rose 2.4% to 16.19 euros at 9:09 a.m. in Frankfurt on Tuesday after earlier gaining as much as 6.2%.
Semiconductor deals have slowed in recent years because of a U.S.-China trade war and concern among some American policy makers that China is pursuing illicit means to acquire key technology. The attempt to buy Cypress by a German company is seen as a important test of how far the Trump administration is willing to go to curb China’s ambitions. Bloomberg News reported last week that some U.S. national security officials had recommended that President Donald Trump block the transaction.
Still, Trump has made some conciliatory statements recently. In a string of tweets last month, the President said that he wants to make it easy for other countries, including China, to do business with the U.S. and keep the lines of trade open.
Other industry deals are still in limbo. Santa Clara, California-based Nvidia Corp. is waiting for Chinese approval of its acquisition of Israel’s Mellanox Technologies Ltd. Nvidia executives have said that they expect the transaction to close in the first half of this year. But investors are still concerned that geopolitics may stifle such consolidation.
Qualcomm Inc. decided to scrap its $44 billion bid for rival chipmaker NXP Semiconductors NV in 2018 after an almost two-year wait for approval.
To contact the reporters on this story: Ian King in San Francisco at ianking@bloomberg.net;Sarah Syed in London at ssyed35@bloomberg.net
To contact the editors responsible for this story: Alistair Barr at abarr18@bloomberg.net, ;Giles Turner at gturner35@bloomberg.net, Amy Thomson
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