Chartered shareholders on Wednesday voted in favor of Advanced Technology Investment Company (ATIC) offer to acquire Chartered. The proposal was approved by 82.56% of the shareholders present and voting in person or by proxy, representing 99.83% of the shares held by shareholders.
"Chartered shareholders have spoken overwhelmingly in favor of the acquisition, and I believe this reflects their recognition that the offer by ATIC provides them with an opportunity to realize their investment. While the acquisition still requires other customary approvals, today's vote was an important milestone in the overall process," said Jim Norling, chairman of the board of directors at Chartered.
In early September ATIC proposed to acquire Chartered Semiconductor. The transaction was expected to close during the fourth quarter of 2009. Once the transaction is completed, ATIC would be the sole owner of Chartered. Following today's shareholder approval, the acquisition still requires approval by the High Court and other certain approvals.
Each Chartered ordinary share will be acquired by ATIC for a cash consideration of S$2.68 per share. The transaction represents an equity value of approximately $1.8 billion and a total value of approximately $3.9 billion, including debt and convertible redeemable preference shares of approximately $2.2 billion as of June 30, 2009.
ATIC is a technology investment company wholly owned by the government of Abu Dhabi. This acquisition is its second major investment in the semiconductor industry and follows the company’s March 2009 creation of Globalfoundries together with Advanced Micro Devices.
The transaction will allow ATIC to build on the complementary platforms of Chartered and Globalfoundries with Chartered’s customer relationships and capabilities in both 8” and 12” fabrication, and Globafoundries’ advanced technology expertise, capacity profile and global footprint.
However, everything may not be that positive. Globalfoundries has two customers: AMD and STMicroelectronics and is losing money. Even though Chartered has many more clients, it has been losing money for the past years. As a result, ATIC and AMD are likely to continue losing money on manufacturing operations. Moreover, in terms of market share, Globalfoundries will still be well behind market leader Taiwan Semiconductor Manufacturing Company.
"This is another positive step toward the combination of two great companies, Chartered and Globalfoundries. By bringing together the talent, technology and experience of both companies and supporting it with our long-term philosophy and patient capital, we offer something unique and competitive to customers and partners in this industry,” said Ibrahim Ajami, chief executive officer of ATIC.