(Bloomberg) -- Infineon Technologies AG raised about 1.55 billion euros ($1.74 billion) in a capital increase to help finance its acquisition of Cypress Semiconductor Corp.
The German chipmaker, which analysts have said may be paying too much for its U.S. rival, sold about 113 million new shares at 13.70 euros each, the company said Tuesday in a statement. The price was about 4.6% below Monday’s closing price of 14.36 euros and the shares fell as much as 6.6% in early trading in Frankfurt to the lowest in almost three years.
Infineon is buying San Jose, California-based Cypress -- a memory-chip maker re-positioning itself as a provider to automobiles and other connected devices -- for an enterprise value of 9 billion euros. The combined entity would have sales that would place it among the top 10 chipmakers globally, according to Citibank.
Some analysts have questioned the wisdom of the deal. The price is high and cost and revenue synergies will have to be achieved to make the acquisition financially attractive, Warburg said earlier this month in a note.
Infineon Chief Executive Officer Reinhard Ploss has argued that the companies are a “perfect fit” because their complementary products create an avenue for faster growth, benefiting employees and shareholders.
S&P Global Ratings has put the company on review for a possible ratings downgrade, citing concerns over financing.
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