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At a meeting held last week, stockholders of Jazz Technologies of Newport Beach, CA, USA voted in favor of merger and reorganization with Tower Semiconductor Ltd of Migdal Haemek, Israel. Approximately 66.1% of Jazz’s outstanding shares of common stock voted to approve the merger, which exceeded the majority vote required for adoption of the agreement. Less than 1% of Jazz’s outstanding shares of common stock voted against the merger.
On 19 September, Tower announced that it had completed the acquisition of Jazz (valued in May this year at $40m). As a result, both Jazz Technologies and Jazz Semiconductor Inc became wholly owned subsidiaries of Tower. Tower’s name will remain and Jazz Semiconductor will be known as Jazz Semiconductor Inc, a Tower Group Company. Russell Ellwanger, Tower’s CEO, has been named chairman of the board of directors of Jazz and will be responsible for developing final details of the merged organizational structure and the integration.
Under the terms of the agreement, Tower acquired all the outstanding shares of Jazz in a stock-for-stock transaction. Upon the closing of the merger, each outstanding share of Jazz common stock was converted into 1.8 Tower ordinary shares, each outstanding warrant and outstanding option to acquire Jazz common stock became exercisable for 1.8 Tower ordinary shares, and Jazz’s convertible notes became convertible into Tower ordinary shares based on the same exchange ratio.
Jazz Technologies was the parent company of Jazz Semiconductor Inc, an independent wafer foundry focused on Analog-Intensive Mixed-Signal (AIMS) process technologies. The firm’s process portfolio includes technologies such as RF CMOS, Analog CMOS, silicon and SiGe BiCMOS, SiGe C-BiCMOS, Power CMOS and High Voltage CMOS.
Tower is a pure-play independent specialty wafer foundry, manufacturing integrated circuits with geometries ranging from 1.0 to 0.13-micron; it also provides complementary technical services and design support. In addition to digital CMOS process technology, Tower offers advanced mixed-signal & RF-CMOS, power management, CMOS image-sensor and non-volatile memory technologies
Ellwanger said: “We expect the merger of the two companies to provide expanded opportunities for growth based on the significant cross-selling opportunities and the broader, more complete product, technology, and service portfolio we are now able to offer to customers. These opportunities further enhance the immediate benefits we expect the merger to provide to our cost structure, which when combined with the recently announced anticipated restructuring of our debt, we expect to result in significant improvements to our financial results, EBITDA and cash flow margins, as well as greatly improve the balance sheet of the combined company.”
Tower says that the merger will create a financially stronger company with trailing twelve month (TTM) revenues of approximately $440m and pro forma TTM EBITDA of around $120m, including the effects of an expected additional $40m in annual cost saving synergies. Following the anticipated closing of Tower’s restructuring transaction with its lenders, Tower’s balance sheet will reflect a $250m reduction in debt and a corresponding $250m increase in shareholders’ equity. This restructuring is also expected to result in improved financial performance and cash flow margins.
Jazz’s major customers include: Conexant Systems Inc, Entropic, Marvell Technology Group Ltd, Mindspeed Technologies Inc, RF Micro Devices Inc, Skyworks Solutions Inc, and Texas Instruments. Tower’s include: Atheros Communications, International Rectifier, Macronix International, On Semiconductors, SanDisk Corporation, Siliconix-Vishay and Zoran Corp.
Operational facilities for Tower and Jazz include one fully owned fab in the United States, two fabs in Israel, and an ownership interest in a fabrication facility in China, which collectively expand capacity up to 750,000 wafer starts annually (8" equivalents).
Gilbert F. Amelio, Jazz’s chairman and CEO, has announced his retirement as an officer and director, although he will continue to serve as a special advisor to Tower’s board of directors.
Amelio co-founded Jazz Technologies (formerly Acquicor Technology) in 2005, and led the firm through an IPO in 2006, its merger with Jazz Semiconductor Inc in 2007, and its merger with Tower.
“On behalf of Jazz and Tower, I would like to thank Gil Amelio for his hard work and dedication,” said Ellwanger. “He was a driving force in helping Jazz evolve into a public company and played a critical role in the merger with Tower.”
Amelio said: " I am proud of what Jazz’s employees have accomplished under my leadership. It has been a privilege to work with them, and I will miss my close association with the Jazz team and my fellow directors. I am confident that the future for Tower and Jazz is bright, and I look forward to helping contribute to its continued success.”
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