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Intel is paying $53 per share for Tower - which specialises in
analogue chips used in cars, medical sensors and power
management - well above a closing price of $33.13 on the Nasdaq
on Monday.
After a delayed opening, Tower's Tel Aviv-listed shares were 40%
higher on Tuesday.
They had surged 48% in after-hours trading on Nasdaq on Monday
after news of a possible takeover was reported. Prior to the
announcement, Tower had a market value of $3.6 billion.
The acquisition will deepen Intel's presence in a sector
dominated by Taiwan-based TSMC, the world's largest chipmaker,
at a time when the global semiconductor shortage has hampered
the production of everything from smartphones to cars.
Tower has been investing in equipment at its manufacturing sites
in Israel, Texas and Japan to boost capacity for 200 and 300
millimetre chips. The company serves "fabless" companies - which
design chips but outsource manufacturing - as well as integrated
device manufacturers and offers more than 2 million wafer starts
per year of capacity, the companies said.
Tower Semiconductor changed its name from TowerJazz in 2020.
"Tower’s specialty technology portfolio (and) geographic reach
... will help scale Intel’s foundry services and advance our
goal of becoming a major provider of foundry capacity globally,"
said Intel Chief Executive Pat Gelsinger.
"This deal will enable Intel to offer a compelling breadth of
leading-edge nodes and differentiated specialty technologies on
mature nodes – unlocking new opportunities for existing and
future customers in an era of unprecedented demand for
semiconductors," he said in a statement.
The U.S. chipmaker said last month it would invest up to $100
billion to build potentially the world's largest chip-making
complex in Ohio. The move is aimed at restoring Intel's
dominance in chip-making and reducing America's reliance on
Asian manufacturing hubs.
Intel has had a large presence in Israel for nearly 50 years and
is one of Israel's largest exporters. In 2017 it bought Israeli
autonomous vehicle technology firm Mobileye for $15.3 billion.
The chipmaker has five sites in Israel and some 14,000
employees.
The transaction is expected to close in about 12 months and has
already been unanimously approved by both boards. The deal is
still subject to certain regulatory approvals including the
approval of Tower’s shareholders.
It is expected to be immediately accretive to Intel’s non-GAAP
earnings per share. Intel said it intends to fund the
acquisition with cash from its balance sheet.
Tower, the companies said, will remain independent until the
deal closes. Then, Tower will be integrated into Intel Foundry
Services (IFS), which Intel established a year ago to help meet
growing global demand for semiconductor manufacturing capacity.
Tower will issue its fourth-quarter and fiscal year 2021
financial results on Thursday, but will not issue first-quarter
guidance because of the deal, they said.
(Reporting by Steven Scheer; editing by Jason Neely and Susan
Fenton)
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