October 19, 2006 – Cypress Semiconductor Corp. has thrown cold water on speculation that it could be the next target for private equity investors’ inroads into the semiconductor industry.
Days ago, Cypress said it exploring “a variety of strategic alternatives” for the company and its SunPower solar-cell unit which was spun off last year, fueling rumors that that Cypress could be the next target for a leveraged buyout, following Philips Electronics’ former semiconductor business (since renamed NXP) and Freescale Semiconductor.
However, in a statement, Cypress said its board has “terminated its process of evaluating a possible buyout of the company, and determined that continuing with its standalone strategy at this time is in the best interests of its stockholders.” The company will continue to explore ways to allow stockholders to fully realize the value of Cypress and its investment in SunPower.
Previously, Doug Freedman, analyst with American Technology Research Inc., had suggested that a Cypress buyout wouldn’t make sense given current premiums being offered, “as it would be selling on 2007 numbers and leaving growth on the table that seems to be just a couple of short years away,” he said, in a research note. Also, “it is often the case that an LBO leaves current shareholders on the outside looking in, and we do not believe [Cypress] management would pursue this course.”