Infineon Technologies AG (ADR) (OTCMKTS:IFNNY) (ETR:IFXA) announced its agreement to acquire International Rectifier Corporation (NYSE:IRF) for $3 billion in cash.

Infineon Technologies

International Rectifier Corporation (NYSE:IRF) is a designer and manufacturer of power management semiconductors. Infineon Technologies AG (ADR) (OTCMKTS:IFNNY) (ETR:IFXA) develops semiconductor, systems solutions and security applications for automotive and industrial electronics. It is the 11th largest semiconductor company worldwide in terms of revenue, according to data from HIS iSupply.

Infineon Technologies – International Rectifier: Transaction details

The acquisition price values the stock of International Rectifier Corporation (NYSE:IRF) for $40 per share, which represents a 51% premium to its closing price on Tuesday.
According to Infineon Technologies AG (ADR) (OTCMKTS:IFNNY) (ETR:IFXA), it will use its available cash and credit facilities to fund the acquisition. The company expects to close the transaction later this year or early in 2015 subject to regulatory approvals.

Infineon Technologies AG (ADR) (OTCMKTS:IFNNY) (ETR:IFXA) anticipated accretive to pro-forma earnings per share already in the fiscal year of closing. The company also expected the combination of the businesses to boost its earnings significantly going forward.

Infineon Technologies AG (ADR) (OTCMKTS:IFNNY) (ETR:IFXA) estimated that the margin contribution of International Rectifier Corporation (NYSE:IRF) is at least in line with its 15% segment result margin over the cycle.

Semiconductor industry mergers

The merger between Infineon Technologies AG (ADR) (OTCMKTS:IFNNY) (ETR:IFXA) and International Rectifier Corporation (NYSE:IRF) came after several deals within the semiconductor industry.

Last December, Avago Technologies Ltd (NASDAQ:AVGO) agreed to purchased LSI Corp (NASDAQ:LSI) for $6.6 billion. Prior to that, Applied Materials, Inc. (NASDAQ:AMAT) also agreed to acquire Tokyo Electron Ltd (TYO:8035).

There had been recent reports regarding the merger discussions between Dialog Semiconductor PLC (ETR:DLG) and AMS AG (OTCMKTS:AUKUF).
The Semiconductor Industry Association reported that global sales of chip makers increased 10.8% to $82.7 billion during the second-quarter. The World Semiconductor Trade Statistics projected that the industry will grow 6.5% this year, up from its previous growth estimate of 4.1%.

Stock action

The stock price of International Rectifier Corporation (NYSE:IRF) surged more than 47% to $39.10 per share. On the other hand, the shares of Infineon Technologies AG (ADR) (OTCMKTS:IFNNY) (ETR:IFXA) declined more than 2% to $11.31 per share at the time of this writing around 1:10 in the afternoon in New York.