Jiwei Network news, a few days ago, Intel officially announced that it will acquire Israeli chip company Tower Semiconductor Ltd. (High Tower Semiconductor) for $53 per share in cash, totaling $5.4 billion, which significantly promotes Intel's IDM 2.0 strategy.
The transaction, which is expected to close within approximately 12 months, has received unanimous approval from intel and Tower Semiconductor's boards of directors and is subject to certain regulatory approvals and customary closing conditions, including approval from Tower Semiconductor's shareholders.
The monthly magazine "Semiconductor Investment and M&A News" will comprehensively analyze the acquisition for the reference of industry insiders.
Project Background:
1) Target company
Tower is a specialized foundry focused on high-value analog semiconductor solutions, providing integrated circuit (IC) technology and manufacturing platforms for growing markets such as consumer, industrial, automotive, mobile devices, infrastructure, medical, aerospace and defense. Headquartered in Migdal HaEmek, north of Israel. It has manufacturing facilities in Israel, California, Texas and Japan.
2) Acquirer
Intel is an American multinational corporation and technology company headquartered in Santa Clara, California, USA. In revenue terms, it is the world's largest semiconductor chip maker and the developer of the x86 family of microprocessors, which are found in most personal computers (PCs). Intel offers microprocessors to many computer system manufacturers. At the same time, Intel also produces motherboard chipset, network interface controller and integrated circuits, flash memory, graphics chips, and embedded processors processors) and other devices related to communications and computing.
Transaction Overview:
According to publicly disclosed information, on February 15, 2022, Tower and Intel jointly signed an Agreement and Plan of Merger, which stipulates that Steel Titanium 2022 Ltd., a wholly owned subsidiary of Intel in Israel for the purposes of the transaction, "Merger Sub") will acquire 100% of Tower's shares in The Merger in the form of a merger, that is, on the effective date of the merger. Tower continues to operate as an in-house company and as a wholly owned subsidiary of Intel.
Currently, the transaction has been approved by Intel and Tower's boards of directors and is subject to certain regulatory approvals and customary closing conditions, including Shareholder Approval from Tower. According to the disclosures of the two parties on their official websites, the transaction is expected to be completed within 12 months.
Main transaction content:
(1) Form of consolidation
Under the merger agreement, Intel's deal with Tower was a Reverse Triangle Merger. Intel established a new Supplier Sub wholly owned by Intel in Israel, and in accordance with the relevant laws and the provisions of the merger agreement, it was merged into Tower by TheMer Sub on the effective date. After the merger, the Merger Sub ceases to exist and Tower will continue to exist as a merged surviving company and as a wholly owned subsidiary of Intel.
(b) the consolidated consideration
On the effective date of the merger, every 1 share of Tower's all issued and unexpired shares with a par value of ILS 15.00 will be converted into a right to receive $53.00 in cash (the "Transaction Consideration"). Common shares of Tower held by Tower, Intel or their respective subsidiaries are not entitled to the transaction consideration.
According to a statement jointly issued by Intel and Tower, the transaction is a share acquisition with a total consideration of approximately $5.4 billion.
(3) Results of the merger
If the transaction is completed, Tower will be delisted from the Nasdaq Global Select Market and Tel Aviv Stock Exchange, and Tower shares will be delisted under the U.S. Securities Act of 1933, the U.S. Securities Exchange Act of 1934, and the Israel Securities Act (5728-1968).
(4) Representations, guarantees and commitments
Intel and Tower have made their usual representations and warranties and undertakings in the merger agreement.
With exceptional exceptions, Tower made commitments regarding the conduct of its business prior to the completion of the merger, including certain acquisitions or divestitures, debt commitments, capital expenditures, litigation matters, and restrictions on employee compensation and benefits.
Within 12 months of the completion of the merger, Intel undertakes, subject to exceptions, to provide the retaining employee with a total target cash compensation and employee benefits, the total amount of which is not less than the benefits provided to the retained employee prior to the effective date of the merger.
The merger agreement contains the usual non-solicitation clause, which prohibits Tower and its subsidiaries or representatives from soliciting alternative acquisition options from third parties, or providing information to third parties, or participating in discussions or negotiations with third parties regarding alternative acquisition options.
Both Intel and Tower have agreed in the Merger Agreement to use their reasonable efforts to obtain all necessary governmental and regulatory consents and approvals, provided that:
1) Neither Intel nor its subsidiaries is required, and neither Tower nor its subsidiaries may propose, take, or agree to actions that, individually or in general, have a material impact on the business or financial condition of Tower and its subsidiaries as a whole without Intel's consent;
2) Neither Intel nor its subsidiaries are required to propose, negotiate, implement, or agree to a sale, divestiture, license, or other disposition;
3) Neither Intel nor its subsidiaries is required to take any action restricting the freedom of action regarding intel or its subsidiaries' business conduct or ability to operate any business, product line, or asset that, individually or in general, together with any divestitures or restrictions on actions related to Tower or its subsidiaries, will have a material impact on the overall business or financial condition of Intel and its subsidiaries.
Trading prerequisites:
Under the Merger Agreement, the parties to the Transaction are required to agree on the following conditions prior to the effective date of the Agreement:
1) Approval of the merger agreement by Intel and Tower shareholders;
2) The U.S. antitrust approval waiting period has expired or terminated, and all designated notices, filings, and acceptance consents have been filed with the government and regulatory authorities of the designated jurisdiction;
3) there are no specific laws, orders, judgments or prohibitions that restrict, prohibit or otherwise prohibit the completion of the transaction;
4) the statutory waiting period has expired after submitting the merger proposal to the Companies Registry of the Israel Companies Authority;
5) The representations and warranties made by Intel and Tower are true and valid and that each party has materially performed its respective obligations under the Merger Agreement;
6) Tower abides by the agreement in all material aspects;
7) Tower does not have any material adverse effects from the date of signing the merger agreement;
8) The completion of this merger is not subject to the financing conditions.
Termination Conditions and Break-up Fees:
Under the Merger Agreement, either Intel and Tower shall have the right to terminate the Merger Agreement, including failure to complete the Transaction by February 15, 2023 (the "Termination Date"). However, in the above cases, the merger agreement stipulates that the period may be extended twice, each time for 3 months, to obtain the required regulatory approvals.
Intel has the right to terminate the merger agreement if:
1) Tower abandoned the transaction due to a better third-party acquisition proposal ;
2) Tower's board of directors makes an adverse recommendation change, and Intel terminates the merger agreement;
3) Tower is in serious breach of its obligation not to solicit under the Merger Agreement.
If the merger agreement is terminated due to failure to obtain certain regulatory approvals, Intel is obligated to pay Tower a $353 million break-up fee.
Industry impact
Intel is the world's leading integrated (IDM) semiconductor company, and Tower is a niche company that focuses on foundry. The market areas where the two overlap are limited. It is worth noting that Tower is the main oem of several Chinese semiconductor companies and has a certain impact on the Chinese market. According to the disclosures on the official websites of the two parties, the transaction can create a globally diversified end-to-end foundry to help meet the growing demand for semiconductors and bring more value to customers in the nearly $100 billion addressable foundry market. The acquisition accelerates Intel's path to becoming a major global supplier of foundry services and capacity, and Intel's highly complementary deal with Tower combines Intel's leading node and scale manufacturing with Tower's expertise and customer-first approach, providing leading technology and manufacturing capabilities and value to customers around the world.
Pat Gelsinger, CEO of Intel, said, "Tower's expertise portfolio, geographic reach, deep customer relationships, and service-oriented operations will help expand Intel's foundry services and advance our goal of becoming a major global foundry supplier." The deal will enable Intel to deliver compelling cutting-edge nodes and differentiated expertise at mature nodes – opening up new opportunities for existing and future customers in an era of unprecedented semiconductor demand. ”
Russell Ellwanger, CEO of Tower, said, "Together with Intel, we will drive new and meaningful growth opportunities and deliver greater value to our customers through a full suite of technology solutions and nodes and a significantly expanded global manufacturing footprint." We look forward to being an integral part of Intel's foundry products." ”
For more details, please pay attention to the monthly magazine "Semiconductor Investment and M&A News"!
(Proofreading/Humphrey)