US: Integrated Silicon, Cypress Semi $643 million deal falls apart

Chipmakers Integrated Silicon Solution and Cypress Semiconductor Corp have failed to reach a merger agreement due to potential antitrust concerns.

Cypress Semi raised its offer to buy Integrated Solution for a second time in May to $643 million, trumping bids by a Chinese consortium led by Summitview Capital.

Integrated Silicon said Cypress Semiconductor was not willing to take “necessary” actions to ensure antitrust clearance in the United States and Germany, countries where both have a significant share of the SRAM memory chip market.

The combined company would also exceed 70 percent of the total market share in Germany, becoming the sole supplier to German carmakers.

In the United States, the Federal Trade Commission and the Department of Justice have 30 days to review a filing and to issue the a subpoena seeking more information, a process also known as “second request”.

Integrated Silicon said a second request investigation was likely and could cost each company more than $3 million, take up to nine months to complete and result in the divestiture of a portion of their SRAM business.

The company said Cypress had downplayed antitrust risks saying the SRAM market was moving to embedded from standalone chips and since the companies were not major suppliers of embedded chips, the deal would not present any antitrust risk.

Integrated Silicon said it asked Cypress to take “all necessary actions” to comply with antitrust rulings, but Cypress only agreed for “all reasonable actions”.

Full content: The Wall Street Journal

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