Intel agrees $5.4bn Tower deal

April 2022 | DEALFRONT | MERGERS & ACQUISITIONS

Financier Worldwide Magazine

April 2022 Issue

In a deal that creates a globally diverse end-to-end foundry to help meet growing semiconductor demand, US multinational technology company Intel Corporation is to acquire Israeli chipmaker Tower Semiconductor for $5.4bn.

Under the terms of the definitive agreement, Intel will acquire Tower for $53 per share in cash, funding the acquisition with cash from the balance sheet. The transaction is expected to close within 12 months.

The deal brings together Intel’s leading-edge nodes and scale manufacturing with Tower’s specialty technologies and customer-first approach to deliver leading technology and manufacturing capabilities and enhanced value to customers globally.

Moreover, the acquisition accelerates Intel’s path to becoming a major provider of foundry services and capacity globally, further expanding its manufacturing capacity, global footprint and technology portfolio to address unprecedented industry demand.

Indeed, with the addition of Tower, Intel is strongly positioned to bring more value to customers across the nearly $100bn addressable foundry market. The deal also significantly advances Intel’s IDM 2.0 strategy to become a major provider of US and Europe-based foundry capacity.

Intel is the only company with both research and development and manufacturing in the US, including recently announced capacity expansions in Arizona and New Mexico. Intel’s capabilities in leading-edge processes are highly complementary to Tower’s technology and manufacturing footprint.

“Tower’s specialty technology portfolio, geographic reach, deep customer relationships and services-first operations will help scale Intel’s foundry services and advance our goal of becoming a major provider of foundry capacity globally,” said Pat Gelsinger, chief executive of Intel. “This deal will enable Intel to offer a compelling breadth of leading-edge nodes and differentiated specialty technologies on mature nodes – unlocking new opportunities for existing and future customers in an era of unprecedented demand for semiconductors.”

The transaction has been unanimously approved by Intel’s and Tower’s boards of directors and is subject to certain regulatory approvals and customary closing conditions, including the approval of Tower’s stockholders.

A leading foundry for analogue semiconductor solutions, Tower provides technology and manufacturing platforms for integrated circuits in growing markets such as consumer, industrial, automotive, mobile, infrastructure, medical, and aerospace and defence.

“With a rich history, Tower has built an incredible range of specialty analogue foundry solutions based upon deep customer partnerships, with worldwide manufacturing capabilities,” said Russell Ellwanger, chief executive of Tower. “Together with Intel, we will drive new and meaningful growth opportunities and offer even greater value to our customers through a full suite of technology solutions and nodes and a greatly expanded global manufacturing footprint.”

Goldman Sachs & Co. LLC served as financial adviser to Intel, while Skadden, Arps, Slate, Meagher & Flom LLP and Yigal Arnon & Co. served as legal advisers. For Tower, JP Morgan Securities LLC served as financial adviser, while Latham & Watkins, LLP and FBC & Co. served as legal advisers.

“We are thrilled to welcome the Tower team to Intel,” concluded Dr Randhir Thakur, president of Intel Foundry Services. “Their decades of foundry experience, deep customer relationships and technology offerings will accelerate the growth of Intel Foundry Services. Tower and IFS together will provide a broad portfolio of foundry solutions at global scale to enable our customers’ ambitions.”

Fraser Tennant