Cypress Semiconductor Corporation Sends Letter to Board of Directors of Integrated Silicon Solution, Inc. | Cypress Semiconductor
Cypress Semiconductor Corporation Sends Letter to Board of Directors of Integrated Silicon Solution, Inc.
SAN JOSE, Calif., June 10, 2015 – Cypress Semiconductor Corp. (NASDAQ: CY) today announced that it sent the following letter to the Board of Directors of Integrated Silicon Solution, Inc.
June 9, 2015
Jimmy S.M. Lee
Scott D. Howarth
President and Chief Executive Officer
Integrated Silicon Solution, Inc.
1623 Buckeye Drive
Milpitas, California 95035
Messrs. Lee and Howarth,
On behalf of Cypress Semiconductor Corporation (“Cypress”), I hereby attach the draft Agreement and Plan of Merger between Integrated Silicon Solution, Inc. (“ISSI”) and Cypress (the “Definitive Merger Agreement”). In an effort to obviate the antitrust concerns you asserted in your June 8, 2015 press release, and confirm that Cypress is not seeking to limit competition for embedded or standalone SRAM supply, the Definitive Merger Agreement includes revised regulatory language that fully responds to your regulatory concerns and that our respective legal counsel understand is acceptable to both parties. We believe that the Definitive Merger Agreement represents a “Superior Proposal” as that term is defined in your merger agreement with Uphill Investment Co.
Cypress is assuming the antitrust risk because it believes the antitrust authorities will readily appreciate the fundamentally procompetitive nature of this transaction and, in that light, will not object to the “SRAM overlap” that you have expressed concern about. There are several reasons for our confidence in this matter:
First, the SRAM overlap concerns non-embedded SRAM for legacy sales, that is, for the installed base of sockets, which amounts to less than 2% of the sales of the combined companies. The overwhelming trend in the SRAM industry is a transition from non-embedded SRAM chips to embedded SRAM solutions where neither Cypress nor ISSI is a significant supplier. Notwithstanding this decline, there still are numerous other existing non-embedded SRAM suppliers able to meet remaining installed base needs.
Second, the sophisticated and powerful customers in that installed base know-how to create the competition desired for their needs and how to discipline suppliers that depend on their good will. In short, these customers exercise significant control over their supply chains and component partners. Significantly, there is and will continue to be intense competition for new applications at the design stage, including competition from a myriad of powerful suppliers of embedded SRAM and of other competing memory technologies.
Third, the merger between Cypress and ISSI will combine a broad range of complementary product lines and businesses, enabling the merged enterprise to offer a more complete product and solution portfolio in line with other full service global chip suppliers. Customers throughout industries now served by those global leaders will benefit from the ability of the merged firm to meet more of their current needs and to become a strong force in the innovation and development of next-generation technologies and solutions for their future needs.
Fourth, that same procompetitive transaction logic is a prime driver of the accelerating consolidation through significantly larger transactions underway in the semiconductor industry. More specialized companies are combining to offer complete and compelling product solutions to large global customers interested in sourcing component solutions from strong, full-service suppliers. The Cypress-ISSI merger will add to that picture and thereby intensify competition throughout many parts of the semiconductor industry.
The Definitive Merger Agreement has been approved by Cypress’s Board of Directors and Cypress stands ready, willing and able to execute the attached Definitive Merger Agreement once you have terminated your existing agreement and plan of merger with Uphill Investment Co. Notwithstanding anything to the contrary contained herein, nothing in this letter constitutes a binding obligation of Cypress to proceed with or consummate a transaction. Any transaction between Cypress and ISSI will be subject to the execution by both ISSI and Cypress of the Definitive Merger Agreement and other related agreements.
We look forward to working with you toward completion of a successful transaction.
President and Chief Executive Officer
This press release contains certain “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts included or incorporated herein may constitute forward-looking statements. These forward-looking statements include, but are not limited to, statements regarding the Company’s offer to acquire ISSI, the Company’s ability to complete the transaction with ISSI, and the Company’s assessment of antitrust risks associated with the proposed transaction with ISSI. Statements including words such as “believes,” “expects,” “will,” “look forward” or similar expressions are forward-looking statements. Because these statements reflect the Company’s current views, expectations and beliefs concerning future events, these forward-looking statements involve risks and uncertainties that may affect the Company’s business or future financial results. These risks include, among others, risks associated with the economy; conditions in the overall semiconductor market; acceptance and demand for the Company’s products; technological and development risks; legal and regulatory matters and other competitive factors. Risks and uncertainties related to the proposed acquisition of ISSI include, among others, the ultimate outcome of any possible transaction between the Company and ISSI, including the possibilities that the Company will not pursue a transaction with ISSI and that ISSI will reject a transaction with the Company; the risk that if ISSI’s board of directors agrees to negotiate a definitive acquisition agreement with the Company and the Company and ISSI enter into a definitive agreement with respect to the proposed transaction, that ISSI’s stockholders do not approve the proposed transaction; potential adverse reactions or changes to business relationships resulting from the announcement or completion of the proposed transaction; uncertainties as to the timing of the proposed transaction; competitive responses to the proposed transaction; the risk that regulatory or other approvals required for the proposed transaction are not obtained or are obtained subject to conditions that are not anticipated; the risk that other conditions to the closing of the proposed transaction are not satisfied; costs and difficulties related to the closing of the proposed transaction and the integration of ISSI’s businesses and operations with Cypress’s businesses and operations; the inability to obtain or delays in obtaining anticipated cost savings and synergies from the proposed transaction; unexpected costs, charges or expenses resulting from the proposed transaction; litigation relating to the proposed transaction; the inability to retain key personnel, customers and suppliers; and any changes in general economic and/or industry specific conditions. Additional factors that could cause future results or events to differ from those the Company expects are those risks discussed under Item 1A., “Risk Factors,” in Cypress’s Annual Report on Form 10-K for the fiscal year ended December 28, 2014, Cypress’s Quarterly Report on Form 10-Q for the quarter ended March 29, 2015, and other reports filed by Cypress with the Securities and Exchange Commission. Please read the “Risk Factors” and other cautionary statements contained in these filings. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, the occurrence of certain events or otherwise. As a result of these risks and others, actual results could vary significantly from those anticipated in this press release, and Cypress’s financial condition and results of operations could be materially adversely affected.
Cypress (NASDAQ: CY) delivers high-performance, high-quality solutions at the heart of today’s most advanced embedded systems, from automotive, industrial and networking platforms to highly interactive consumer and mobile devices. With a broad, differentiated product portfolio that includes NOR flash memories, F-RAM™ and SRAM, Traveo™ microcontrollers, the industry’s only PSoC® programmable system-on-chip solutions, analog and PMIC Power Management ICs, CapSense® capacitive touch-sensing controllers, and Wireless BLE Bluetooth® Low-Energy and USB connectivity solutions, Cypress is committed to providing its customers worldwide with consistent innovation, best-in-class support and exceptional system value. To learn more, go to www.cypress.com.
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