© MagnaChip Business | March 31, 2020
MagnaChip Semiconductor to sell its foundry business and Fab 4
MagnaChip Semiconductor says that certain of its wholly-owned subsidiaries have entered into a definitive agreement to sell the company's Foundry Services Group and the factory in Cheongju (Fab 4), the larger of the company's two 8" manufacturing facilities.
The buyer is a special purpose company (the SPC) in South Korea established by Alchemist Capital Partners Korea Co., Ltd. and Credian Partners, Inc. Under the terms of the Agreement, the total transaction value is approximately USD 435 million, including USD 344.7 million in cash. MagnaChip intends to use the net proceeds from the transaction to significantly reduce debt and strengthen its balance sheet. “This is an excellent outcome for all our stakeholders, including customers, employees and investors. 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. We look forward to building upon our leadership position in the OLED display driver business and are excited about the emerging MicroLED space,” says MagnaChip's CEO, YJ Kim, in a press release. Upon the closing of the transaction, about 1’500 MagnaChip employees are expected to be transferred to the SPC, which would result in SPC assuming approximately USD 90 million in statutory severance liabilities recorded on MagnaChip's balance sheet. “After conducting a thorough strategic evaluation process of the Foundry business and Fab 4, the Board of Directors and management team concluded that this transaction was the best option to maximize value for our shareholders,” adds Nader Tavakoli, Chairman of the Board of MagnaChip. “Following the completion of this sale, MagnaChip will be streamlined operationally, largely freed of interest expense and we believe will be ideally positioned for continued future success.”
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