May 22, 2007 – After months of rumors, assumptions, and anticipation (and frustration) by industry watchers, Intel and STMicroelectronics have finally done what everyone thought they would do: combine their flash memory assets into a new company. The catch: they’ve brought in an unexpected partner to help foot the bill.
Under terms of the deal, ST will bring in its flash memory assets, including its NAND joint venture interest and other NOR resources, while Intel will sell its NOR assets and resources. ST will have the majority stake (48.6%) and receive a $468 million cash payment, while Intel gets a 45.1% stake and $432 million in cash.
The surprise third party in the deal is private equity firm Francisco Partners LP, which will add $150 million in cash for a 6.3% stake in the firm.
In addition, the new company has received “firm commitments” for a $1.3 billion term loan, underwritten by a consortium of banks, and $250 million revolver. Proceeds from the term loan will be used for working capital and payment to Intel and STMicroelectronics for the purchase price. The transaction, subject to regulatory approvals and customary closing conditions, is expected to close sometime in 2H07.
Brian Harrison, currently VP and GM of Intel’s flash memory group, will serve as the new company’s CEO. ST’s flash memory group VP, Mario Licciardello, will be COO of the firm, while ST president/CEO Carlo Bozotti has been designated as chairman.
The new company, with combined annual revenues of around $3.6 billion, will be headquartered in Switzerland and incorporated in the Netherlands, with nine main R&D and manufacturing locations around the world and approximately 8000 employees. The firm will incorporate about 2500 patents and 1000 patents pending from Intel and ST, and will integrate the two firms’ parallel programs on phase-change memory, though they did not disclose details of how those efforts will be combined.
“We will be able to offer customers complete solutions with NOR- and NAND-based technologies, which we believe will provide significant opportunities for growth and the potential to develop products for many new application areas and geographic regions,” said Harrison, in a statement.
Added Bozotti: “The new company will be positioned to service customers with all of the elements necessary to deliver current and next-generation non-volatile memory technologies, while allowing ST to redefine its participation in flash memory.”