Independent specialty foundry Tower Semiconductor Ltd. (Nasdaq: TSEM; TASE: TSEM) has acquired American Stock Exchange-listed Jazz Technologies Inc. (AMEX: JAZ) in an all stock transaction.
Jazz Technologies is the parent company of Jazz Semiconductor, an independent wafer foundry focused on analog-intensive mixed-signal (AIMS) process technologies. Tower and Jazz have complementary businesses, and the combined company will subsequently offer more specialty processes than as separate firms.
Together, the firms have production facilities in the US, Israel, and China. Enhanced revenue and increased cost savings are expected to be worth about $40 million, according to the companies.
Migdal Haemek-based Tower will acquire all of the outstanding shares of Jazz in a stock-for-stock transaction valuing Jazz at a fully diluted equity value of approximately $40 million, based on Tower's closing price on NASDAQ on May 19, 2008. Under the terms of the agreement, each outstanding share of Jazz common stock will be converted into the right to receive 1.8 Tower ordinary shares. The total value of the transaction, including net debt, is approximately $169 million. The transaction is expected to close in the second half of 2008.
"The acquisition of Jazz is an excellent strategic fit for Tower - it 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 Tower CEO Russell Ellwanger. "We are confident that we will realize significant benefits and synergies, including a comprehensive process portfolio which expands our addressable market and fuels a growing and more diversified customer base with highly differentiated product platforms."
Tower also announced its first quarter financial results yesterday, reporting $57.6 million revenue for the quarter, compared with revenue of $55.6 million in the first quarter of 2007 and $ 61.6 million in the fourth quarter of 2007.
Non-GAAP gross profit totaled $21 million, representing a 36.4% gross margin.
The firm reported a GAAP-based net loss for the quarter of $29.6 million, or $0.24 per share, compared with $40.2 million, or $0.38 per share, for the corresponding quarter of 2007.
Tower expects that second quarter revenue will be in a range of between $56 million and $60 million, slightly below average analyst estimates of $63.4 million for the quarter.
Published by Globes [online], Israel business news - www.globes-online.com - on May 20, 2008
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