Abu Dhabi's Advanced Technology Investment Company (ATIC) has agreed to buy Singapore's Chartered Semiconductor Manufacturing for US$1.8 billion, according to reports Monday.
ATIC will pay US$1.86 per share of state-controlled Chartered Semiconductor, a major player in the global chip industry. That amounts to US$1.8 billion in cash. Including debt and convertible redeemable preference shares of about S$3.1 billion (US$2.1 billion), the deal is valued at about US$3.9 billion.
The takeover, however, is still subject to approval by Chartered Semiconductor's shareholders and Singapore's High Court.
Temasek Holdings, Singapore's state-owned investment firm that owns 62 percent of Chartered Semiconductor's stock, has approved the sale, in a move that will end the company's 22-year investment in the unprofitable chip foundry, reported Abu Dhabi newspaper The National.
In August 2008, international credit-rating company Fitch Ratings cut the debt rating of Chartered Semiconductor to "junk" status.
News wire Bloomberg reported that the pending merger will allow ATIC to combine the operations of Chartered Semiconductor, which manufactures chips used in Microsoft's Xbox 360 game console, with GlobalFoundries--a joint venture the Abu Dhabi company created with Advanced Micro Devices (AMD). This will pit the merged entity better against rival United Microelectronics, and change the competitive landscape for the semiconductor market, the report added.
Earlier this year, Intel threatened to pull out of a 2001 cross-licensing patent agreement with AMD, citing concerns over the GlobalFoundries venture.
Joel D. Pinaroc is a Filipino freelance IT writer currently based in Saudi Arabia.