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Tower Semi acquires Jazz Technologies

Posted: 21 May 2008     Print Version  Bookmark and Share

Keywords:specialty foundry  CMOS image sensor  non-volatile memory 

Tower Semiconductor Ltd has signed a deal for the acquisition of Jazz Technologies Inc., in order to expand its efforts in the specialty foundry arena.

Under the terms, Tower will acquire all of the outstanding shares of Jazz at an equity value of approximately Rs.160.08 crore ($40 million). The total value of the transaction, including net debt, is approximately Rs.676.36 crore ($169 million).

The move will expand Tower's worldwide presence, but the deal also raises some concerns among observers. Jazz is struggling and has been on the block for some time. Israel-based Tower has also struggled and lost vast sums of money over the years.

The deal is a surprise, as Tower was not considered a likely suitor to buy Jazz. Still, Tower and Jazz claim that they offer complementary technologies. The companies bring together Tower's strength in CMOS image sensor, non-volatile memory and RF CMOS with Jazz's expertise in mixed signal, power management and RF.

Tower also expands its fab portfolio. The company has its fabs in Israel. Jazz has a fab in Newport Beach and has capacity agreements with various foundries in China. In total, the combined company offers capacity of approximately 750,000 8-inch wafer starts annually.

''The acquisition creates economies of scale, which allows for improved margins and strongly complements our specialty process offering, transforming us into the leading specialty pure-play foundry,'' said Russell Ellwanger, CEO of Tower, in a statement.

The agreement has been unanimously approved by the boards of directors of both Tower and Jazz.

Separately, Tower said revenue for the first quarter of 2008 was Rs.230.52 crore ($57.6 million) as compared to revenue of Rs.222.52 crore ($55.6 million) in the first quarter of 2007 and Rs.246.53 crore ($61.6 million) in the prior quarter.

Calculated in accordance with GAAP, net loss for the first quarter was Rs.118.46 crore ($29.6 million), or minus Rs.9.61 ($0.24) per share, compared to a loss of Rs.160.88 crore ($40.2 million), or minus Rs.15.21 ($0.38) per share, for the same period in 2007.





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