Monday, September 25, 2006

Jazz Semiconductor to be Acquired by Buy-out Firm

Jazz Semiconductor, an independent wafer foundry primarily focused on specialty CMOS process technologies, has entered into a merger agreement with Acquicor Technology Inc., a publicly traded firm focused on acquiring businesses with technologies that can be positioned advantageously in the market. The all-cash deal is valued at $260 million.

Jazz Semiconductor was initially formed upon the contribution to Jazz of Newport Fab, LLC by Conexant Systems Inc., together with a $52 million cash investment in Jazz by The Carlyle Group for a controlling interest. The Carlyle Group invested in Jazz to facilitate the company's transition from a captive manufacturing facility within Conexant to an independent semiconductor foundry. This transition has largely been completed and has resulted in over 300 design wins with over 95 new customers.

Jazz's initial customers consisted of Conexant and Skyworks Solutions, Inc., a publicly traded company created from the spin-off of Conexant's wireless business and the merger with Alpha Industries in June 2002. Since then, Jazz has successfully expanded and diversified its customer base. These new customers include Freescale Semiconductor, Marvell, Texas Instruments, and RF Micro Devices.

As a result of the acquisition offer, Jazz will drop plans for a pending IPO.

Acquicor is led by industry veteran Gilbert F. Amelio, former chairman and chief executive officer of Apple Computer, Inc. and former chairman and chief executive officer of National Semiconductor Corporation. Mr. Amelio also served as the president of Rockwell Communications Systems, a semiconductor manufacturing division of Rockwell International Corporation, which was later spun-off as Conexant Systems, Inc. In that capacity, Mr. Amelio was responsible for operation of the manufacturing facility that is now operated by Jazz.

As a result of the deal, Conexant expects to gain $100 million for its share of Jazz.

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