Israeli semiconductor maker Tower Semiconductor (Nasdaq:TSEM; TASE:TSEM) of Migdal Ha'emek has sold its 10.5% stake in non-volatile memory company Saifun Semiconductor for $39 million in cash. Tower may receive additional payments through August 2005 subject to certain future events. Tower's announcement described the buyer as "a US-based private equity investor."
The investor is US investment fund General Atlantic. General Atlantic is remembered here for having bought 35.9% of Israeli company PowerDsine (Nasdaq: PDSN) for $53 million, i.e. at a value of $150 million, on the eve of its Nasdaq IPO. Three weeks later, PowerDsine was floated at a value of $214 million, after money, and its current market cap is $234 million.
The identity of the buyer could be taken as an indication that Saifun's own IPO is not far away.
Tower said it would post a $32 million capital gain on the deal in the fourth quarter. It added that the 1997 Non Volatile Memory (NVM) technology agreement between Tower and Saifun remained unchanged.
"This transaction and its timing is an important step in our Fab 2 financing plan and, together with the recently announced cost reduction measures, would enable us to focus on growing our businesses," said Tower chairman and CEO Carmel Vernia. "We purchased our position in Saifun for $6 million and it has been an excellent performer for us over the years."
In fact, Saifun's company value for the purposes of the deal, approximately $370 million, seems somewhat low, given Tower's refusal a few months ago to sell its stake at a value of $550-600 million. Saifun is expected to be floated on Wall Street in the first quarter of 2005, after several postponements. Market expectations are for an IPO at a value of some $500 million.
Saifun was founded in 1997 by Boaz Eitan, formerly of Intel, who is considered a world expert on non-volatile memory components. It has raised $95 million in three financing rounds. The last round, in which it raised $50 million, was carried out in 2002 at a value of $500 million, as part of a compromise with Fujitsu and AMD. Saifun had sued AMD for patent infringement.
Published by Globes [online] - www.globes.co.il - on December 9, 2004