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May 22, 2007
Intel, STMicroelectronics And Francisco Partners Establish A New
Leader In Flash Memory
GENEVA and SANTA CLARA, Calif., May
22, 2007 – STMicroelectronics, Intel and Francisco Partners today
announced they have entered into a definitive agreement to
create a new independent semiconductor company from the key
assets of businesses which last year generated approximately $3.6
billion in combined annual revenue. The new company's strategic
focus will be on supplying flash memory solutions for
a variety of consumer and industrial devices, including cellular
phones, MP3 players, digital cameras, computers and other high-tech
equipment.
The new company will combine key research and development,
manufacturing and sales and marketing assets of Intel and
STMicroelectronics into a streamlined worldwide structure with the scale
to produce cost-effective and innovative non-volatile memory solutions. With
STMicroelectronics and Intel contributing more than 40 years of
combined experience in non-volatile memory technology development, including next-generation
phase-change memory, the company will be well positioned to
both serve its customers with complete memory solutions and
accelerate the move to future non-volatile memory technologies.
"The new
company will be positioned to service customers with all
of the elements necessary to deliver current and next-generation
non-volatile memory technologies, while allowing ST to redefine its
participation in flash memory," said Carlo Bozotti, STMicroelectronics president
and CEO, and non-executive chairman designate of the new
company.
"The new memory company will have the people, scale
and technology leadership to meet the needs of customers
requiring leading-edge products in this highly competitive marketplace," said
Paul Otellini, Intel president and CEO.
"From the outset, the
company will be a leading supplier of flash memory
solutions for wireless communications," said Brian Harrison, named to
become the CEO of the new company at the
close of the transaction and currently vice president and
general manager of Intel's Flash Memory Group. "We will
be able to offer customers complete solutions with NOR-
and NAND-based technologies, which we believe will provide significant
opportunities for growth and the potential to develop products
for many new application areas and geographic regions."
Under the
terms of the agreement, STMicroelectronics will sell its flash
memory assets, including its NAND joint venture interest and
other NOR resources, to the new company while Intel
will sell its NOR assets and resources. In exchange,
Intel will receive a 45.1 percent equity ownership stake
and a $432 million cash payment at close. STMicroelectronics
will receive a 48.6 percent equity ownership stake and
a $468 million cash payment at close. Francisco Partners
L.P., a Menlo Park, Calif.-based private equity firm, will
invest $150 million in cash for convertible preferred stock
representing a 6.3 percent ownership interest, subject to adjustment
in certain circumstances. Concurrently, the parties have arranged for
the new company to receive firm commitments for a
$1.3 billion term loan and $250 million revolver. The
term loan will be underwritten by a consortium of
banks. Proceeds from the term loan will be used
for working capital and payment to Intel and STMicroelectronics
for the purchase price. The transaction is subject to
regulatory approvals and customary closing conditions and is expected
to occur in the second half of 2007.
"The new
company will immediately be able to offer a very
broad range of non-volatile memory solutions in order to
address the needs of a wide variety of communications
and industrial customers," said Dipanjan Deb, founder and managing
partner at Francisco Partners.
The new company, to be managed
by Brian Harrison as CEO-designate and Mario Licciardello, currently
corporate vice president of ST's Flash Memories Group as
COO-designate, will be headquartered in Switzerland and incorporated in
the Netherlands with nine main research and manufacturing locations
around the world and approximately 8,000 employees. The company
will also benefit from a worldwide sales force.
With assets
and resources from Intel and STMicroelectronics, including a patent
portfolio of approximately 2,500 patents and 1000 patents pending,
the new company will have the scale to benefit
from the increasing demand for memory resulting from the
growing amount of information and content that is becoming
more mobile and is now based almost entirely on
digital technology. The integration of STMicroelectronics' and Intel's parallel
programs on phase-change memory, a key technology capability, will
also help to bring the benefits of advanced flash
memory technology to potential customers more quickly and efficiently.
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