In a joint press release, the companies valued the transaction at about $4 billion, noting that the post-merger entity will generate more than $2 billion in annual revenue.
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 about 50 percent of the new business.
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, Spansion's chairman, who will be nonexecutive chairman of the combined company, which will be headquartered in San Jose, California, and called Cypress Semiconductor.
Shares of Cypress were unchanged in extended-hours trade. Spansion gained more than 9 percent after the bell.