(CY) Cypress Semiconductor Raises Ramtron Bid Again

Cypress Semiconductor Corporation (CY) has raised its all-cash bid to buy all of Ramtron International Corp.’s (RMTR) outstanding stock for $2.88 per share, a 59% premium to Ramtron’s closing price of $1.81 as of June 11. This new offer would translate into a purchase price of about $109 million.

The revised offer will expire on September 11, 2012. It was earlier scheduled to expire on August 24, 2012. However, all other terms and conditions of the offer remain unchanged.

This is Cypress’ fourth attempt in two years to take over its peer Ramtron. The initial offer of $2.48 per share was raised to $2.68 per share in July, representing a purchase price of about $95 million. The offer was declined by Ramtron, which stated that it was inadequate and not in the best interest of its shareholders.

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. (TXN) and Toshiba Corp. as manufacturing partners. In the second quarter of 2012, Ramtron reported revenue of $14.2 million with a net profit of $69,000.

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 relies on partners for manufacturing, assembly and testing of products that offer superior technology and services at competitive prices

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 read-writes with very little delay, low power consumption, and high endurance with limited memory loss.

The F-RAM is also competitive with some of the newer technologies such as Phase-change-RAM. The Memory Products Division segment generated 41% of revenue in the second quarter and was up 1.3% sequentially. The sequential increase came on the back of strong demand in the static random access memory (SRAM) business.

The impact of the deal on Cypress’ financials is unknown but it will definitely bring synergies on the sales side.

Cypress is a semiconductor company offering high-performance, mixed signal, programmable solutions. In the second quarter, Cypress reported earnings of 5 cents, beating the Zacks Consensus Estimate of 3 cents. Higher touch sales, improved gross margins and tight operating expense control contributed to the upside in earnings.

Recently, the company also announced that its board of directors has approved a quarterly cash dividend of 11 cents per share payable on October 18, 2012. The regular dividend payments are a good way of encouraging investor confidence as it returns shareholder value.

Cypress operates in a highly competitive market. In the touchscreen market, the company competes with Atmel Corporation (ATML) and Synaptics (SYNA).

Currently, Cypress has a Zacks #3 Rank, implying a short-term Hold rating.

Read the full analyst report on “CY”
Read the full analyst report on “RMTR”
Read the full analyst report on “TXN”
Read the full analyst report on “ATML”
Read the full analyst report on “SYNA”
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