Intel Announced the Termination of Tower’s Acquisition
16 August, 2023
China did not approve the $5.4 billion acqusuition deal, signed in February 2022. Tower's shares down 8%. The company faces slight decline in sales
After it had failed to recieve the needed approval of Chinese regulators, , Intel Corporation announced that it has mutually agreed with Tower Semiconductor to terminate its previously disclosed agreement to acquire Tower. On February 15, 2022 Intel and Tower Semiconductor announced a definitive agreement under which Intel will acquire Tower for $53 per share in cash, representing a total enterprise value of approximately $5.4 billion. The aimed to strenthen Intel’s IDM 2.0 strategy to become a leading chip production services provider (foundry).
But during the last 18 months, the US-China tension proved to be a stronger force than Intel’s ambitions, and even after the deal had received across the board approvals, the Chinese authorities made no effort to proceed, and actually waited until it will be clear that no approvel is expexted to be given in the near future. “Our respect for Tower has only grown through this process” said Pat Gelsinger, CEO of Intel, “and we will continue to look for opportunities to work together in the future.”
Russell Ellwanger, Tower Semiconductor CEO, said: “We appreciate the efforts by all parties. During the past 18 months, we’ve made significant technological, operational, and business advancements. We are well positioned to continue to drive our strategic priorities and short-, mid- and long-term tactics with a continued focus on top and bottom-line growth.”
Tower Semiconductor provides a broad range of customizable process platforms such as SiGe, BiCMOS, mixed-signal/CMOS, RF CMOS, CMOS image sensor, non-imaging sensors, integrated power management (BCD and 700V), and MEMS. It owns two manufacturing facilities in Israel (150mm and 200mm), two in the U.S. (200mm), three facilities in Japan (two 200mm and one 300mm) which it owns through its 51% holdings in TPSCo and is sharing a 300mm manufacturing facility being established in Italy with ST.
During the last year it faced a slight decline in sales, from $847 millions in H1 2022, to approximately $713 million in H1 2023. until this morning Tower was traded in NASDAQ in valuation of 3.85 billion – 20% below the deal valuation. It means that many investors preculated the deal will fail. Following the deal termination, Tower’s share lost additional 10%, bringing its valuation to approximately $3.5 billion