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Infineon to buy International Rectifier for $3B

Germany's Infineon Technologies announced on Wednesday that it will acquire U.S.-based semiconductor company International Rectifier for about $3 billion cash.

The report pushed down shares in Infineon by as much as 3.2 percent in early afternoon trade. They had regained some ground, trading more than 1 percent lower.

Shares of International Rectifier rose more than 47 percent.

Guenter Schiffmann | Bloomberg | Getty Images

The German company will acquire the U.S. firm for $40 a share, a 48 percent premium over the average share price for the past three months and 51 percent over Tuesday's closing share price.

"With their great knowledge of specific customer needs and their application understanding, International Rectifier employees will contribute to Infineon's strategic development from product thinking to system understanding and system solutions," said Reinhard Ploss, CEO of Infineon, in a press release.

Infineon said it would fund the transaction using cash on hand and fully underwritten credit facilities totaling 1.5 billion euros ($2.0 billion).

A person close to the negotiations had told Reuters earlier that Infineon was poised to strike a deal to buy a U.S. chipmaker.

Shareholders had been calling on Ploss, who has been at the helm for almost two years, to use Infineon's cash pile of more than 2 billion euros ($2.7 billion) to make acquisitions or return the money to investors.

Read MoreThe sexy R&D behind boring chip companies

On July 30, Infineon board member Arunjai Mittal told analysts that the group would pick any target according to its strategic fit, how difficult post-merger integration would be and how much it would add to Infineon's sales and profits.

By Reuters. CNBC.com contributed to this report.

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