Jazz Technologies, (AMEX:JAZ)
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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.