RMTR Ramtron International Corp. (MM)

Cypress Semiconductor Corporation (CY) recently announced that it has finally reached an agreement to buy Ramtron International Corp. (RMTR) for $3.10 per share in cash. The deal is expected to close by the end of the calendar year.

This was Cypress’ fourth attempt in more than one year to take over its peer Ramtron International. The deal represents a premium of 71% to Ramtron’s closing price of $1.81 per share on June 11. The offer translates into a purchase price of about $109.8 million.  

The first public offer of $2.48 per share was made in June, which was rejected stating that it was inadequate and not in the best interest of Ramtron’s shareholders.

Ramtron International is a fabless semiconductor company with about 34.0 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 makes 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) will likely 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.

Cypressoperates 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.

 
ATMEL CORP (ATML): Free Stock Analysis Report
 
CYPRESS SEMICON (CY): Free Stock Analysis Report
 
RAMTRON INTL CP (RMTR): Free Stock Analysis Report
 
SYNAPTICS INC (SYNA): Free Stock Analysis Report
 
TEXAS INSTRS (TXN): Free Stock Analysis Report
 
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