SAN JOSE, Calif. Atmel Corp. has entered into separate agreements with Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC) and Highbridge Business Park Ltd. for the sale of its 8-inch wafer fabrication equipment and related property located in North Tyneside, U.K.
Under the terms, TSMC (Hsinchu, Taiwan) has agreed to purchase Atmel's 8-inch wafer fabrication equipment. Highbridge Business Park Ltd. has agreed to purchase the North Tyneside land and buildings for a combined total of $124 million in cash.
Atmel, based here, will continue to manufacture products at the North Tyneside facility into the first quarter of 2008, during which time production will be redeployed to the company's manufacturing operations in Colorado Springs, Colo. and Rousset, France as well as to external foundries.
The company expects to record a gain of up to $40 million offset by related restructuring charges of up to $50 million. The timing for recording the gains and restructuring charges will be determined once all selling contingencies and closing conditions are finalized.
The transaction is expected to be approximately neutral on a cash flow basis after the elimination of $35 million of debt and the recognition of other financial charges. The sale is subject to customary closing conditions, including a comprehensive consultation exercise with employees in accordance with best United Kingdom employment relations practice.
Atmel had previously announced its intention to sell this facility as part of its strategic restructuring initiatives to reduce costs, accelerate growth and enhance profitability.
Moving towards a ''fab lite'' strategy, Atmel late last year said it plans to sell two fabs and will reduce its headcount by 1,300 employees. At the time, Atmel said it will seek to sell its wafer fabrication facilities in North Tyneside, U.K. and Heilbronn, Germany.
"The sale of our North Tyneside facility is a major step forward in transitioning Atmel to a fab-lite manufacturing model, which will improve our cost structure and increase shareholder value," said Steven Laub, Atmel's president and chief executive, in a statement.
Late last year, Atmel signed an agreement to sell its Grenoble, France subsidiary and the wafer fab to e2v technologies plc for approximately $140 million in cash.
This sale follows the previously announced sale of Atmel's Irving, Texas wafer fabrication facility to Maxium for approximately $38 million in cash.
In July, Atmel sold its network storage unit to MoSys Inc. for an undisclosed sum.