TI Sells Memory Business to Micron Technology
Micron Technology, Inc. (Boise, ID), and Texas Instruments Incorporated (TI; Dallas, TX) have entered an agreement for Micron to purchase the assets of TI's semiconductor memory business for a combination of common stock and assumption of debt totaling approximately $800 million. The transaction is expected to close in the second half of this year, and includes the purchase of substantially all of TI's memory assets, as well as TI's shares in its two DRAM manufacturing joint ventures.
Under the terms of the agreement, TI will receive approximately 28.9 million shares of Micron common stock, $740 million principal amount of seven-year, 6.5% notes convertible into an additional 12 million shares of Micron common stock, and a $210 million principal amount, seven year, 6.5% subordinated note. Micron also will assume approximately $190 million of government-sponsored debt associated with TI's Italian memory operations.
In addition to TI's memory assets, Micron will receive $750 million in financing from TI to facilitate the deployment of Micron's technology throughout the business. Micron and TI have also agreed upon a 10-year royalty-free semiconductor patent cross-license agreement, to begin January 1, 1999. TI will retain ownership of its related patents.
TI currently operates three wholly owned manufacturing facilities that are included in the transaction: a wafer fabrication facility in Avezzano, Italy; a wafer fabrication facility in Richardson, TX (formerly known as TwinStar); and an assembly/test facility in Singapore. TI will close its Richardson, TX memory manufacturing operation, with Micron retaining the facility for future capacity. Micron expects to offer positions to most of the TI memory employees.
Also included in the transaction is TI's interest in two joint ventures: TECH Semiconductor Singapore, owned by TI, Hewlett-Packard, Canon, and the Singapore Economic Development Board; and KTI Semiconductor in Japan owned by TI and Kobe Steel. TI currently owns an approximate 25% interest in each joint venture and has rights to 100% of the production of each joint venture.
As part of an ongoing effort to transform itself from a multi-business corporation to a semiconductor company focused on digital signal processing solutions, TI has divested 12 businesses over the past several years. As a result of these divestitures, the pending sale of the memory business, and weakness in the current semiconductor market environment, TI plans to implement a worldwide restructuring program, which will include the closing of several facilities and the elimination of approximately 3,500 jobs around the world over the next few months through voluntary programs, attrition, outsourcing and layoffs. The company expects ongoing pretax savings from the restructuring to be about $270 million annually when fully implemented, offsetting the fixed and allocated costs of the memory business not absorbed by Micron.
Edited by Beth Brindle