MagnaChip Sells Foundry, Fab 4 Manufacturing Units
MagnaChip to Sell Foundry, Manufacturing Units for $435 Million
(Bloomberg) -- MagnaChip Semiconductor Corp. has reached an agreement to sell its foundry business and Fab 4 manufacturing facility in a deal valued at about $435 million.
The South Korean chipmaker said in a statement it agreed to sell the businesses to a consortium led by private equity firms Alchemist Capital Partners Korea Co. and Credian Partners Inc. The group agreed to buy the businesses for roughly $345 million in cash and the assumption of about $90 million statutory severance liabilities associated with employees that will be transferred with the businesses, the companies said.
Shares in the company jumped more than 30% in early trading Tuesday in New York. Its shares closed at $9.38 in New York on Monday, giving the Cheongju-based company a market value of about $326 million.
MagnaChip intends to used the proceeds to pay down debt and strengthen its balance sheet, it said. The transaction is expected to close in the next six months.
“This is an excellent outcome for all our stakeholders, including customers, employees and investors,” Young-Joon Kim , Magnachip’s chief executive officer, said in the statement. “Importantly, it will allow us to meaningfully improve our balance sheet, and fully focus as a pure-play standard products company on the attractive high-growth opportunities in our display solutions and power solutions business lines.”
MagnaChip, which designs and manufactures analog and mixed-signal semiconductor chips for consumer electronics, announced a strategic review of the two business units in February 2019.
Under the terms of the deal, Alchemist and Credian will serve as joint general partners. The consorium also includes SK Hynix Inc., one of the world’s largest semiconductor companies, and Korean Federation of Community Credit Cooperatives.
Roughly 1,500 MagnaChip employees will be transfered to the new special purpose company established by the firms.
JPMorgan Chase & Co. served as financial adviser to MagnaChip. Paul Weiss Rifkind Wharton & Garrison LLP and Kim & Chang provided legal advice.
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