RMTR Ramtron International Corp. (MM)

Cypress Semiconductor Corporation (CY) announced that it has extended the deadline for the acceptance of its tender offer to buy all of Ramtron International Corp.'s (RMTR) outstanding stock for $2.88 per share by two weeks.

The initial offer of $2.68 per share was raised to $2.88 per share last month, representing a purchase price of about $109 million. The offer was declined by Ramtron stating that it was inadequate and not in the best interest of its shareholders. The deadline for the offer was scheduled to expire on September 11, which has now been extended to September 25.

However, all other terms and conditions of the offer remain unchanged. This is the fourth time that Cypress has extended the deadline for acceptance of its offer to buy Ramtron.

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 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.

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.

 
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