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What's happening? 
Shares of Cypress Semiconductor Corporation (NASDAQ:CY) rose more than 15% today after the company announced it will merge with embedded systems specialist Spansion (NYSE: CODE) in an all-stock transaction valued at roughly $4 billion. Shares of Spansion also jumped more than 20% on the news.

Why it's happening 
According to Cypress' release, the deal will provide roughly 50% ownership for both Cypress and Spansion shareholders, to whom the combined company will still pay an $0.11 per share quarterly dividend. Together, Cypress and Spansion will also generate over $2 billion in annual revenue.

"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," stated Cypress CEO T.J. Rodgers. "[...] We will also have extraordinary opportunities for EPS accretion due to the synergy in virtually every area of our enterprises."

To be sure, the PR describes "significant" accretion in earnings per share stemming from around $135 million in annual cost synergies -- though it'll take around three years for the combined company to achieve that level. In the meantime, the transaction is still expected to be accretive to adjusted earnings within the first full year after its planned first-half 2015 close. All things considered, and given both the resulting operating efficiencies and economies of scale, it's hard to blame the market for bidding up shares of both Cypress and Spansion today.

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