Stock Update (NASDAQ:CY): Cypress Semiconductor Corporation Sends Revised Definitive Merger Agreement to Integrated Silicon Solution, Inc.

Cypress Semiconductor Corporation (NASDAQ:CY) announced that it sent the following letter to the Board of Directors of Integrated Silicon Solution, Inc.:




June 17, 2015

Jimmy S.M. Lee
Executive Chairman

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 revised draft Agreement and Plan of Merger between Integrated Silicon Solution, Inc. (“ISSI”) and Cypress (the “Revised Definitive Merger Agreement”), which fully responds to the presentation you filed on June 12, 2015 titled “Uphill Investment Co. Merger Proposal, Special Meeting of Stockholders” (the “Presentation”).

In the Presentation, you expressed several concerns regarding the Definitive Merger Agreement that Cypress transmitted to ISSI on June 9, 2015 (the “Prior Cypress Proposal”), which was the basis for your continued recommendation that ISSI stockholders approve the amended Agreement and Plan of Merger (the “Uphill Agreement”) with Uphill Investment Co. (“Uphill”). We believe that the Revised Definitive Merger Agreement transmitted herewith resolves all such concerns as described below:


Our revised offer of $21.25 per share is clearly superior to the price offered by Uphill. Furthermore, we have introduced a ticking fee (as fully described in the Revised Definitive Merger Agreement), which will add an incremental $0.10 per share for each additional quarter required to obtain regulatory approval for a transaction with Cypress. This ticking fee will accrue daily starting on October 1, 2015 (the day after you expect the Uphill transaction to close) and will be payable by Cypress to ISSI stockholders at transaction close. The Uphill Agreement provides no such ticking fee.

Reverse Termination Fee

The Uphill Agreement allows ISSI to collect a reverse termination fee in certain scenarios where Uphill fails to obtain debt financing in order to close their proposed transaction, while the Prior Cypress Proposal did not offer such a reverse termination fee. Despite the fact that the Prior Cypress Proposal had no financing risk whatsoever, you pointed out the absence of such a reverse termination fee. While we think such a reverse termination fee is entirely unnecessary in our fully financed transaction, we have now included a reverse termination fee in the Revised Definitive Merger Agreement.

Timing of Closing

The Presentation stated that the Uphill Agreement is “expected to close in third quarter calendar 2015 (with specific timing subject to CFIUS and Taiwanapprovals),” while the Prior Cypress Proposal is “expected to close 6-9 months following signing a merger agreement.” As a result, you state that the “expected real value of the Cypress proposal is less than its stated price.” We strongly disagree with your view on the timing regarding the Prior Cypress Proposal as compared to the Uphill Agreement. We are confident that Cypress will obtain regulatory approval in a timely manner and that the Uphill Agreement presents no timing advantage. Nevertheless, the Revised Definitive Merger Agreement now incorporates the ticking fee described above. This ticking fee addresses the economic impact of any additional time required to obtain regulatory approval for a transaction with Cypress, which we do not expect will be required, and demonstrates our commitment to closing a transaction expeditiously.

Given our revised offer of $21.25 per share, the $0.10 per share per quarter ticking fee and the other additional concessions provided in the Revised Definitive Merger Agreement, we have clearly addressed all outstanding issues and concerns relative to the Uphill Agreement. Compared to the Uphill Agreement, Cypress’s offer is now superior with respect to both price and terms. Therefore, we believe you should immediately recognize our offer as a Superior Proposal (as defined in the Uphill Agreement) and move expeditiously to execute the Revised Definitive Merger Agreement in accordance with the terms of the Uphill Agreement. Cypress also expects Institutional Shareholder Services (ISS) to withdraw its recommendation that ISSIstockholders vote in favor of the Uphill Agreement.

The Revised Definitive Merger Agreement has been approved by Cypress’s Board of Directors and Cypress stands ready, willing and able to execute the Revised Definitive Merger Agreement once you have terminated the Uphill Agreement. 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 andISSI will be subject to the execution by both ISSI and Cypress of the Revised Definitive Merger Agreement and other related agreements.

As done previously, we are simultaneously releasing this letter to the public as we believe that it is in the best interest of ISSI and its stockholders to have full information regarding our commitment to expeditiously enter into this Revised Definitive Merger Agreement. The Revised Definitive Merger Agreement will be filed with the SEC on a form 8-K on June 18.

We continue to look forward to working with you toward completion of a successful transaction.


T.J. Rodgers
President and Chief Executive Officer (Original Source)

Shares of Cypress Semiconductor closed yesterday at $12.535 . CY has a 1-year high of $16.25 and a 1-year low of $8.04. The stock’s 50-day moving average is $13.17 and its 200-day moving average is $13.95.

On the ratings front, Cypress Semiconductor has been the subject of a number of recent research reports. In a report issued on June 11, Wedbush analyst Betsy Van Hees reiterated a Buy rating on CY, with a price target of $17, which represents a potential upside of 35.6% from where the stock is currently trading. Separately, on June 1, Needham’s Rajvindra Gill maintained a Buy rating on the stock and has a price target of $20.

According to, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Betsy Van Hees and Rajvindra Gill have a total average return of 17.6% and 25.2% respectively. Hees has a success rate of 56.1% and is ranked #255 out of 3632 analysts, while Gill has a success rate of 65.5% and is ranked #26.

Cypress Semiconductor Corp with its subsidiaries, designs, develops, manufactures and markets high-performance, mixed-signal, programmable solutions that provide customers with rapid time-to-market and system value.

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