Chip maker Cypress Semiconductor and Spansion today announced an agreement to merge in an all-stock, tax-free transaction valued at approximately $4 billion. The post-merger company will generate more than $2 billion in revenue annually and create a global provider of microcontrollers and specialized memories needed in today's embedded systems.

"This merger represents the combination of two smart, profitable, passionately entrepreneurial companies that are No. 1 in their respective memory markets and have successfully diversified into embedded processing," said Rodgers, Cypress's founding president and CEO. "Our combined company will be a leading provider of embedded MCUs and specialized memories. We will also have extraordinary opportunities for EPS accretion due to the synergy in virtually every area of our enterprises."

Under the terms of the agreement, Spansion shareholders will receive 2.457 Cypress shares for each Spansion share they own. The shareholders of each company will own approximately 50 percent of the post-merger company. The company will have an eight-person board of directors consisting of four Cypress directors, including T.J. Rodgers and Eric Benhamou, and four Spansion directors, including John Kispert and Ray Bingham, the Spansion chairman, who will serve as the non-executive chairman of the combined company, which will be headquartered in San Jose, California and called Cypress Semiconductor Corporation.

The closing of the transaction is subject to customary conditions, including approval by Cypress and Spansion stockholders and review by regulators in the U.S., Germany and China. The transaction has been unanimously approved by the boards of directors of both companies. Cypress and Spansion expect the deal to close in the first half of 2015.