Abu Dhabi group pitches Chartered+GlobalFoundries merger combo

Sept. 7, 2009 –  The Abu Dhabi backer of GlobalFoundries, the chip manufacturing spinoff of AMD, has pitched a $3.9 billion offer to take over Singapore’s Chartered Semiconductor Manufacturing, creating a multifaceted and truly "global" foundry business. State investment company Temasek Holdings and 62% stakeholder has given its blessing with "an irrevocable undertaking" to vote for it.

Under terms of the proposed deal, Advanced Technology Investment Co. LLC (ATIC) of Abu Dhabi would pay S$2.68/share (US ~$1.86, a 14.2%/26.8%/44.2% premium on the company’s 30-day/90-day/6-mo. average SGX prices), amounting to an equity value of US ~$1.8B; it would also assume debt and convertible shares of US $2.2B, for a total value of US$3.9B.

Strategically, the acquisition offers a "complementary platform" with ATIC’s other chipmaking progeny, GlobalFoundries, which it helped create in March of this year, widening its capabilities for both 200mm and 300mm manufacturing and widening its global footprint — the combined entity would have manufacturing in Asia (Singapore) and Europe (Dresden), with a new fab currently under construction in the US and planned to be online sometime in 2012.

Structurally, GlobalFoundries’ Doug Grose would helm the combined entity; current Chartered CEO would serve as COO and spearhead integration of the two entities.

"We believe that by having access to ATIC’s long-term capital and related assets, Chartered has an opportunity to bring its skills, capabilities and leadership to the next level," said Waleed Al Mokarrab, ATIC chairman, in a statement.

Chartered chairman Jim Norling cited the deal as solving two key areas for the chipmaker: scale, and "substantial, continued capital investment."

Back in late-May of this year, reports suggested that ATIC had sighted Chartered Semiconductor in its crosshairs with an offer to buy Temasek’s majority stake. The Singapore foundry, at the time, denied receiving such a bid, though added in boilerplate lingo that it is open to discussions of various business opportunities.


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