With Cypress Semiconductor’s Merger Drama Ending, It May Offer Way to Offset Market Turbulence

In late spring 2019, German chipmaker Infineon announced its intent to purchase Cypress Semiconductor (NASDAQ: CY) for 9 billion euros, good for a $23.85 per share cash payout to Cypress shareholders. It represented a 55% premium (at last share price before the news) for owners of the volatile Silicon Valley hardware maker, and shares raced higher to within a few percentage points of the offer price.

While shareholders of both companies approved the tie-up, a regulatory review has meant Cypress has remained independent for the time being -- although shares have held steady above $23 as the expected closure of the sale approached. Close to the inevitable cash-out price, I advised shareholders it was time to move on, and subsequently sold my stake too.

But the situation was temporarily upended with regulatory drama in early March of this year on a report that U.S. regulators might make a recommendation to the White House to block Infineon's takeover on national security risks. The report put the takeover by Infineon temporarily in doubt and sent Cypress shares down by a third -- close to where the share price was late last spring when the deal was announced. Those who took a chance and bought the dip were rewarded when, a few days later, the Committee on Foreign Investment in the U.S. (CFIUS) went ahead and approved the deal. Cypress stock rallied back up to $23 a share again. What a roller coaster.

Source Fool.com