Tower Semiconductor Completes Merger with Jazz Technologies
September 19 2008 - 9:01AM
Business Wire
Tower Semiconductor Ltd. (NASDAQ: TSEM) (TASE: TSEM): Merger
Creates: -- � Leading specialty foundry with increased capacity and
scale offering a comprehensive process portfolio; -- Cross-selling
opportunities among diverse customer bases of both companies; --
Financially strong merged company with: -- Trailing twelve month
(TTM) revenues of approximately $440 million; -- Pro forma TTM
EBITDA of approximately $120 million (including effects of $40
million of expected cost synergies savings) Gilbert F. Amelio
Retires as Jazz Chairman and CEO, Will Serve as Special Advisor to
Tower�s Board of Directors Tower Semiconductor Ltd. (NASDAQ: TSEM)
(TASE: TSEM), an independent specialty wafer foundry, today
announced the completion of its merger with Jazz Technologies, Inc.
(formerly AMEX: JAZ), a leader in Analog-Intensive Mixed-Signal
(AIMS) foundry solutions. As a result of this transaction, both
Jazz Technologies and its subsidiary, Jazz Semiconductor, Inc.,
became wholly owned subsidiaries of Tower Semiconductor. Tower�s
name will remain the same and Jazz Semiconductor will be known as
Jazz Semiconductor, Inc., a Tower Group Company. Russell Ellwanger,
Tower�s chief executive officer, 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 plan over the next several months. Commenting on the
transaction Ellwanger stated, �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.� Paul Pittman, Jazz�s Chief Financial Officer,
said, �We are pleased with the strong support from Jazz�s
stockholders for this merger. More than 66% of our stockholders
voted in favor of this merger and less than one percent voted
against it. We look forward to working with Tower to enhance our
corporate value for the benefit of Tower�s stockholders.� The
merger creates a financially stronger company with trailing twelve
month (TTM) revenues of approximately $440 million and pro forma
TTM EBITDA of approximately $120 million, including the effects of
an expected additional $40 million in annual cost saving synergies
previously announced in conjunction with the merger. Following the
anticipated closing of Tower�s restructuring transaction with its
lenders based on the Memorandum of Understanding reached last
month, Tower�s balance sheet will be significantly improved and
reflect a $250 million reduction in debt and corresponding $250
million increase in shareholders� equity. This restructuring is
also expected to result in improved financial performance and cash
flow margins due to lower interest expense as a result of the
reduced debt. In addition, the merger creates significant
cross-selling opportunities from Tower to Jazz customers and from
Jazz to Tower customers. Jazz�s major customers listed
alphabetically include, among others: Conexant Systems, Inc.,
Entropic, Marvell Technology Group, Ltd., Mindspeed Technologies,
Inc., RF Micro Devices, Inc., Skyworks Solutions, Inc. and Texas
Instruments. Tower�s major customers listed alphabetically include,
among others: Atheros Communications, International Rectifier,
Macronix International, On Semiconductors, SanDisk Corporation,
Siliconix-Vishay and Zoran Corp. Tower and Jazz together now
provide one of the industry�s broadest portfolios of specialty
process technologies combining Tower�s offerings in CMOS image
sensor, non-volatile memory (NVM) and CMOS (RF and power) with
Jazz�s expertise in mixed signal, power management (CMOS and BCD)
and RF (RF CMOS, SiGe and BiCMOS). Jazz�s process technologies and
customer base are complementary to Tower with minimal overlap,
which we believe will enable Tower and Jazz to address a diverse
customer base in high growth markets. Additionally, Tower and Jazz
offer an IDM technology transfer program along with strong design
support and customized design solutions providing modular
technology that allows flexibility and rapid customization to fit
customers� production needs. �We are pleased to complete this
merger and are excited to move forward, poised to realize our
vision of becoming the leading pure-play specialty foundry
worldwide,� added Ellwanger. �Technology leadership and scale are
critical in meeting the unique requirements of our customers, and
with the merger now complete, we will continue to focus on customer
needs for increased capacity, expanded process offerings and
industry-leading design enablement services.� Operational
facilities for Tower and Jazz span the globe with one fully owned
fab in the United States, two fabs in Israel, as well as an
ownership interest in a fabrication facility in China, which
collectively expand capacity up to 750,000 wafer starts annually
(8" equivalents). As a result, this merger considerably enhances
both companies� geographic reach and distribution capabilities,
which we believe creates a significant opportunity for revenue
enhancement and increased efficiencies in manufacturing. Gilbert F.
Amelio, Jazz�s chairman and chief executive officer, announced his
decision to retire as an officer and director effective upon the
closing of the merger. He will continue to serve as a special
advisor to Tower�s board of directors. Dr. Amelio co-founded Jazz
Technologies (formerly Acquicor Technology) in 2005 and helped to
lead the company through an initial public offering 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. We are grateful
for all Gil has done for Jazz, its customers and its employees. We
wish Gil the best and look forward to continuing to work with him."
Commenting on his retirement, Dr. Amelio said, "I am pleased to
have helped Acquicor evolve from a blank check company to a leader
in AIMS foundry solutions, and with the merger with Tower, into a
truly international company. 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." Under the terms of the merger, Tower
acquired all of 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. Effective September 19,
2008, Jazz�s common stock, warrants and units will no longer be
traded on the American Stock Exchange (AMEX). Tower and Jazz have
submitted the merger for review by the Committee on Foreign
Investment in the United States ("CFIUS"), a group of U.S. agencies
that reviews foreign acquisitions of U.S. companies for national
security reasons pursuant to the Defense Production Act of 1950.
The review by CFIUS has not been completed. In this regard,
Ellwanger said, "We are committed to continued full cooperation
with CFIUS in its review and we will address in good faith any
issues that arise in the course of that review.� About Tower
Semiconductor Ltd. Tower Semiconductor Ltd. is a pure-play
independent specialty wafer foundry established in 1993. The
company manufactures 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.
To provide world-class customer service, the company maintains two
manufacturing facilities, each with standard and specialized
process technology processes: Fab 1 ranging from 1.0 to 0.35-micron
and Fab 2 featuring 0.18 and 0.13-micron. Tower's web site is
located at http://www.towersemi.com. About Jazz Technologies and
Jazz Semiconductor Jazz Technologies, Inc. and Jazz Semiconductor,
Inc. are wholly owned subsidiaries of Tower Semiconductor Ltd. Jazz
Semiconductor, Inc., a Tower Group company is a leading wafer
foundry focused on Analog-Intensive Mixed-Signal (AIMS) process
technologies. The company's broad process portfolio includes
specialty technologies, such as RF CMOS, Analog CMOS, Silicon and
SiGe BiCMOS, SiGe C-BiCMOS, Power CMOS and High Voltage CMOS. Jazz
also offers world-class design enablement tools to allow complex
designs to be achieved quickly and more accurately. Jazz executive
offices and its U.S. wafer fabrication facility are located in
Newport Beach, CA. For more information, please visit
http://www.jazztechnologies.com and http://www.jazzsemi.com.
Forward Looking Statements This press release includes
forward-looking statements based on management�s current
expectations and beliefs which are subject to risks and
uncertainties. For example, forward-looking statements include
statements regarding synergies, customer benefits, growth
opportunities, financial improvements, costs savings and other
benefits anticipated from the merger and the expected closing of
Tower�s restructuring transaction with its banks. Actual results
may vary from those projected or implied by such forward-looking
statements. The potential risks and uncertainties include, among
others, the possibility that these expected synergies, customer
benefits, growth opportunities, financial improvements, costs
savings and other benefits will not be achieved or that the
companies are unable to successfully execute their integration
strategies, that after the closing of the merger, the businesses of
the companies may suffer due to uncertainty, as well as other
risks. A complete discussion of risks and uncertainties that may
affect the accuracy of forward-looking statements included in this
press release or which may otherwise affect our business is
included under the heading "Risk Factors" in Tower�s most recent
filings on Forms 20-F, F-3, F-4 and 6-K, as were filed with the
Securities and Exchange Commission (the �SEC�) and the Israel
Securities Authority, and Jazz�s most recent filings on Forms 10-K
and 10-Q, as were filed with the SEC. Tower and Jazz do not intend
to update, and expressly disclaim any obligation to update, the
information contained in this release.
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