SAN JOSE, Calif. -- In a blockbuster deal, On Semiconductor Corp. has acquired AMIS Holdings Inc., parent company of AMI Semiconductor, for approximately $915 million in stock.
The combined company has cumulative revenues of more than $2 billion and EBITDA of more than $500 million over the last 12 months.
The move expands On Semiconductor's efforts into the ASIC, image sensor and foundry sectors. It also expands the company's analog and mixed-signal portfolio. AMI's products are used in a wide variety of applications, including automotive, medical, industrial, military/aerospace, communications, computing, and consumer products.
But AMI has also been struggling in recent times. Last month, the company announced that as a result of an audit review, it will be restating its first and second quarter 2007 financial statements, resulting in a negative net adjustment to net income of approximately $443,000 for the first half of 2007. Third quarter 2007 revenue was $154.6 million, a decrease of less than 2 percent sequentially and 3 percent compared to the third quarter of 2006.
Meanwhile, analog and mixed-signal specialist On Semiconductor itself has been on the acquisition trail. Last month, it acquired the voltage regulation and thermal monitoring products for computing applications from Analog Devices Inc. for $185 million. On Semiconductor also bought LSI Corp.'s 8-inch wafer fab in Oregon several years ago.
AMI will boost the company's business. "AMIS will immediately contribute exciting new products and capabilities in the medical and military/aerospace markets and will complement our existing automotive and industrial businesses," said Keith Jackson, president and CEO of On Semiconductor (Phoenix), in a statement.
''Over time, we plan to leverage the advanced sub-micron capabilities of our Gresham, Oregon, fabrication facility to achieve operational synergies and extend AMIS's high voltage and low power offerings,'' he said.
Under the plan, On Semiconductor's Jackson will serve as president and CEO of the combined company, to be based in Phoenix, Ariz. On Semiconductor's non-executive chairman, J. Daniel McCranie, will continue as non-executive chairman of the board of the combined company, which will be expanded to eight members with the addition of Christine King, CEO of AMIS
The companies are looking at ways to cut costs. ''We have identified significant operational and manufacturing cost synergies, up to $50 million in pre tax savings in 2009 that may be achieved through the integration of AMIS and rationalization of our combined infrastructure,'' said Donald Colvin, ON Semiconductor executive vice president, CFO and treasurer. ''We expect to begin to realize these synergies within two quarters of closing the transaction.''
Under the terms of the agreement, which has been approved by both boards of directors, AMIS shareholders will receive 1.150 shares of On Semiconductor common stock for each share of AMIS common stock they own.
Based on the closing stock price of On Semiconductor on Dec. 12, this represents a value to AMIS shareholders of approximately $10.14 per share. Upon completion of the transaction, On Semiconductor will issue approximately 104 million shares of common stock on a fully diluted basis to complete the transaction.
ON Semiconductor and AMIS stockholders will own approximately 74 percent and 26 percent, respectively, of the combined company. The transaction is subject to the approval of shareholders from both companies as well as customary closing conditions and regulatory approvals.
Stockholders holding approximately 24 percent of the voting stock of AMIS have entered into voting agreements in support of the transaction. The companies expect the transaction to close in the first half of 2008.
Upon closing, On Semiconductor may record a one-time charge for purchased in-process research and development expenses and other deal related costs. The amount of that charge, if any, has not yet been determined.
Separately, On Semiconductor also announced that, in connection with this transaction, its board has increased its share repurchase authorization from 30 million shares to 50 million shares.